HI There!,

I need the answer of the below question immediately.

Beckstead Company makes a single product called a widget.The company normally produces and sells 80,000 widgets each year at a selling price of $40 per unit.The company's unit cost at this level of activity is given below:

Direct materials

$9.50

Direct labor

10.00

Variable manufacturing overhead

2.80

Fixed manufacturing overhead

5.00

($400,000 total)

Variable selling expenses

1.70

Fixed selling expenses

4.50

($360,000 total)

Total cost per unit

$33.50

Required:

Assume that Beckstead Company has sufficient capacity to produce 100,000 widgets each year without any increase in fixed manufacturing overhead costs.The company could increase sales by 25% above the present 80,000 units each year if it were willing to increase the fixed selling expenses by $150,000.Would the increased fixed selling expenses be justified?