2 The following are the unit costs of making and selling an item ar a volume of 30,000 units per month, which represents the company's capacity $6.70 12.70 eBook Manufacturing Direct materials Direct labor Variable overhead Fixed overhead Selling and administrative: Variable Fixed 2.70 4.70 Print 8.70 10.70 Assume the company has 300 units left over from last year which have small defects and which will have to be sold at a reduced price as scrap. This would have no effect on the company's other sales. The variable selling and administrative costs would have to be incurred to sell the defective units. The cost that is relevant as a guide for setting a minimum price on these defective units is: (Round your answer to two decimal places.) Multiple Choice O $35.50 per unit $8.70 per unit O $1940 per unit O $38.00 per unit 3 The Hudson Corporation has 9,000 obsolete units of a product that are carried in Inventory at a manufacturing cost of $180,000. If the units are remachined for $49,000, they could be sold for $82,000. Alternatively, the units could be sold for scrap for $29,000. The alternative that is more desirable and the total relevant costs for that alternative are: eBook Print Multiple Choice remachine, $229.000 scrap: $180,000 remachine: $49,000 scrap: $151,000. 4 A study has been conducted to determine if one of the product lines of Kalamazoo Company should be discontinued. This product line generates a contribution margin of $360,000 per year. Fixed expenses allocated to the product line are $450,000 per year. It is estimated that $270,000 of these fixed expenses could be eliminated if the product line is discontinued. These data indicate that if the product line is discontinued, the company's overall net operating Income would: eBook Print Multiple Choice Increase by $180,000 per year. decrease by $180,000 per year. increase by $90,000 per year, decrease by $90,000 per year