Question 5: Relevant costing and Short-run decision making

Part A

Chris is the owner of Chris' Computers, a local shop that assembles and sells gaming computers online. Business has been going very well, although Chris is concerned that the people he hires to assemble computers from component parts are not fully employed. He estimates that his business could easily assemble and sell another 100 computers a month. Whether he does or not, Chris pays his two technicians who assemble the computers $3,000/month each as a flat salary.

Chris is currently selling 900 computers a month for $1,500 each. Variable costs for each computer sold is provided below:

Item Unit cost Case $50 CPU $220 RAM $120 Graphics $500 LED lights $80 Variable overhead $12