Barker company has a single product called a Zet. The company normally produces and sells 81,000 Zets each year at a selling price of $46 per unit. The company’s unit costs at this level of activity are given below: Direct Materials $7.50 Direct Labor $9.00 Variable Manufacturing Overhead $4.80 Fixed Manufacturing Overhead $8.00 ($648,000 Total) Variable Selling Expenses $2.70 Fixed Selling Expenses $5.50 ($445,500 Total) Total Cost Per Unit $37.50 The company has 600 Zets on hand that were produced last month and have small blemishes. Due to the blemishes, it will be impossible to sell these units at the normal price. If the company wishes to sell them through regular distribution channels, what unit cost figure is relevant for setting a minimum selling price? Explain.
Barker company
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