Elegance Company makes fine jewelry that it sells to department stores throughout the United States. Elegance is trying to decide which of two bracelets to manufacture. Elegance has a labor contract that prohibits the company from laying off workers freely. Cost data pertaining to the two choices follow.

Required:

a. Identify the fixed costs and determine the amount of fixed cost for each product.

b. Identify the variable costs and determine the amount of variable cost per unit for each product.

c. Identify the avoidable costs and determine the amount of avoidable cost for each product.

Transcribed Image Text:

Bracelet A Bracelet B Cost of materials per unit $ 30 $ 50 Cost of labor per unit 40 40 Advertising cost per year 8,000 6,000 Annual depreciation on existing equip. 5,000 4,000