Answer 1-a
Financial advantage | $ 511,300 |
Calculations:
Units | |||
particulars | Per Unit | 121,000 | 151,250 |
Sales | $ 44.00 | $ 5,324,000 | $ 6,655,000 |
Less: variable Cost | $ - | ||
Material | $ 8.50 | $ 1,028,500 | $ 1,285,625 |
Labor | $ 9.00 | $ 1,089,000 | $ 1,361,250 |
Manufacturing Overhead | $ 3.60 | $ 435,600 | $ 544,500 |
Selling Overhead | $ 1.70 | $ 205,700 | $ 257,125 |
Less: Fixed Cost | $ - | ||
Manufacturing Overhead | $ 3.00 | $ 363,000 | $ 363,000 |
Selling Overhead | $ 5.50 | $ 665,500 | $ 795,500 |
Net Income | $ 12.70 | $ 1,536,700 | $ 2,048,000 |
Answer 1-b
Yes
Answer 2
Break even price per unit | $ 27.10 |
Calculation:
Particulars | Per Unit | 30,250 units |
Variable Cost | ||
Material | $ 8.50 | $ 257,125 |
Labor | $ 9.00 | $ 272,250 |
Manufacturing Overhead | $ 3.60 | $ 108,900 |
Import duties | $ 2.70 | $ 81,675 |
Permits | $ 18,150 | |
Selling Overhead | $ 2.70 | $ 81,675 |
Total costs | $ 819,775 | |
Units | 30,250 | |
Break-even price per unit | $ 27.10 |
Answer 3
Relevant unit cost | $ 1.70 |
Explanation:
Only Variable selling cost is considered. This is because all other costs are already incurred and are irrelevant for decision making.
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