Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Peggy Company makes and sells a product that normally sells for $65. Because of a defective machine, 1,000 units were not produced correctly and remain
Peggy Company makes and sells a product that normally sells for $65. Because of a defective machine, 1,000 units were not produced correctly and remain in inventory. Each of the defective unit has the following costs assigned to it by the company's absorption costing system:
Direct materials | $6.00 per unit |
Direct labor | $2.00 per unit |
Variable Overhead | $0.5 per unit |
Fixed Overhead | $1.2 per unit |
The company has two options regarding the defective units: (1) be sold for $8 per unit, or (2) repaired and sold at the regular price.
Q.: What is the minimum cost of repair per unit in order for the company to choose option (1)?
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started