Question
ABC company has a single product called a Tak. The company normally produces and sells 60,000 Tak each year at a selling price of $30
ABC company has a single product called a Tak. The company normally produces and sells 60,000 Tak each year at a selling price of $30 per unit. The company's unit costs at this level of activity are given below
Direct Materials $10
Direct Labor $4.50
Variable Overhead $2.30
Fixed Overhead $5.00
Variable Selling $1.20
Fixed Selling $3.50
ABC company has sufficient capacity to produce 90,000 Taks each year. ABC Company could increase its sales by 20% above current levels if it were willing to increase the fixed selling expenses by $150,000, should they implement the modified selling program?
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