Quality Industries manufactures large workbenches for industrial use. Yewell Hartnet, the Vice President for marketing at Quality Industries, concluded from market analysis that sales were dwindling for Quality's workbenches due to aggressive pricing by competitors. Quality's workbench sells for $1,640 whereas the competition's comparable workbench sells for $1,460. Yewell determined that a price drop to $1,460 would be necessary to protect its market share and maintain an annual sales level of 14,000 workbenches.
Cost data based on sales of 14,000 workbenches:
| Budgeted Quantity | Actual Quantity | Actual Cost | |||||||
| Direct materials (pounds) | 180,000 | 173,000 | $3,455,000 | ||||||
| Direct labor (hours) | 74,800 | 74,000 | 827,500 | ||||||
| Machine setups (no. of setups) | 1,400 | 1,080 | 255,000 | ||||||
| Mechanical assembly (machine hours) | 30,800 | 283,750 | 3,760,000 | ||||||
The current cost per unit is (rounded to the nearest whole dollar):
Multiple Choice
$544.
$479.
$421.
$593.
$401.
Total actual cost = $3,455,000 + $827,500 + $255,000 + $3,760,000 = $8,297,500
Cost per unit = Total actual cost / Units to be sold
= $8,297,500 / 14,000
= $593
4th option
Quality Industries manufactures large workbenches for industrial use. Yewell Hartnet, the Vice President for marketing at...
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