Question

multiple choice question
why is the unit product cost different from the cost that would be incurred if another (additional) unit were produced?

the unit product cost is an average, not an incremental cost.
the cost that would be incurred if another unit were produced cannot be calculated.
there would be no additional cost to produce another unit.
the predetermined overhead rate changes with each unit produced.

need help? review these concept resources.
read about the concept

Explanation:

Unit product cost is calculated as total production costs divided by the number of units produced, making it an average cost. The cost of producing one additional unit is an incremental (marginal) cost, which only accounts for the variable costs associated with that extra unit, not the average of all fixed and variable costs combined. The other options are incorrect: the incremental cost can be calculated, there are typically variable costs for an additional unit, and the predetermined overhead rate is fixed in advance for a period and does not change with each unit produced.

Answer:

The unit product cost is an average, not an incremental cost.