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This year Bertrand Company sold 42,000 units of its only product for $17.40 per unit. Manufacturing and selling the product required $127,000 of fixed manufacturing
This year Bertrand Company sold 42,000 units of its only product for $17.40 per unit. Manufacturing and selling the product required $127,000 of fixed manufacturing costs and $187,000 of fixed selling and administrative costs. Its per unit variable costs follow. |
Material | $ | 4.70 | ||
Direct labor (paid on the basis of completed units) | 3.70 | |||
Variable overhead costs | 0.47 | |||
Variable selling and administrative costs | 0.27 | |||
Next year the company will use new material, which will reduce material costs by 70% and direct labor costs by 30% and will not affect product quality or marketability. Management is considering an increase in the unit sales price to reduce the number of units sold because the factory |
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