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Barker Company has a single product called a Zet. The company normally produces and sells 80,000 acts each year. The company's unit costs at this
Barker Company has a single product called a Zet. The company normally produces and sells 80,000 acts each year. The company's unit costs at this level of activity are given below: One of the materials used in the production of Zets is obtained from a foreign supplier. Civil unrest m the supplier's country has caused a cutoff in material shipments that is expected to last for three months. Barker Company has enough materials on hand to operate at 40% of normal levels for the three-month period. As an alternative, the company could close the plant down entirely for the three months. Closing the plant would reduce fixed manufacturing overhead during the three-month period and the fixed selling expenses would continue at two-thirds of their normal level. What is the selling price per unit of Zet that would make the company indifferent between, (i) closing the plant and (ii) not closing the plant for the three-month period? A. $35.50 B. $43.50 C. $24.00 D. $31.50 E. None of the above Barker Company has a single product called a Zet. The company normally produces and sells 80,000 acts each year. The company's unit costs at this level of activity are given below: One of the materials used in the production of Zets is obtained from a foreign supplier. Civil unrest m the supplier's country has caused a cutoff in material shipments that is expected to last for three months. Barker Company has enough materials on hand to operate at 40% of normal levels for the three-month period. As an alternative, the company could close the plant down entirely for the three months. Closing the plant would reduce fixed manufacturing overhead during the three-month period and the fixed selling expenses would continue at two-thirds of their normal level. What is the selling price per unit of Zet that would make the company indifferent between, (i) closing the plant and (ii) not closing the plant for the three-month period? A. $35.50 B. $43.50 C. $24.00 D. $31.50 E. None of the above
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