Question

Curvy Confections is considering building a new plant in Europe. It predicts sales at the new plant to be​ 40,000 units at​ $9.00/unit. Below is a listing of estimated​ expenses:

Category	Total Annual Expenses	​% of Annual Expense that are Fixed
Materials	​$20,000	​20%
Labor	​$40,000	​30%
Overhead	​$40,000	​50%
​Marketing/Admin	​$25,000	​70%

A European firm was contracted to sell the product and will receive a commission of​ 15% of the sales price. No U.S. home office expenses will be allocated to the new facility.

The unit variable cost for Curvy Confections is

A.

​$3.13.

B.

​$1.34.

C.

​$3.14.

D.

​$1.79.

Answer 1

The answer has been presented in the supporting sheet. All the parts has been solved with detailed explanation and format. For detailed answer refer to the supporting sheet.

В Answer 2 The correct answer is C) $ 3.14 3 4 5 Calculation of unit variable cost 6 Total Annual Variable portion of Category annual expenses 7 Expenses 8 Material 20000 16000 9 Labor 28000 40000 10 Overhead 40000 20000 11 Marketing 25000 7500 12 Total 71500 40000 13 No. of units Variable cost exclusing 14 commsission 1.79 15 Commission 1.35 16 Total 3.14 17 18 Thus the correct answer is $ 3.14 (rounded off to 2 decimal places) 19 N st