Answered step by step
Verified Expert Solution
Link Copied!

Question

00
1 Approved Answer

Peggy Company makes and sells a product that normally sells for $68. 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 $68. 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 $2.25 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)?

A.: $ per unit

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access with AI-Powered Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Students also viewed these Accounting questions