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Harry s Sandwich Shop uses a process costing system for its foot - long sub sandwiches and carries no beginning or ending Work in Process
Harrys Sandwich Shop uses a process costing system for its footlong sub sandwiches and carries no beginning or ending Work in Process inventories. During the company produced and sold subs and incurred the following costs:
Total Per equivalent unit
Direct material $ $
Direct labor
Manufacturing overhead
Total $ $
The current selling price is $ per sub and the gross profit for was $times $times $ Sales projections for at the current price look flat, but the manager believes that if the sales price is reduced to $ sales volume would increase by units. Assume that direct material and direct labor are variable costs and that manufacturing overhead costs are primarily fixed. Should Harrys Sandwich Shop lower the selling price?
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