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Under absorption costing a company had the following per unit costs when 10,000 units were produced. Direct labor $ 2 Direct material 3 Variable overhead
Under absorption costing a company had the following per unit costs when 10,000 units were produced.
Direct labor | $ | 2 | |
Direct material | 3 | ||
Variable overhead | 4 | ||
Total variable cost | 9 | ||
Fixed overhead ($50,000/10,000 units) | 5 | ||
Total product cost per unit | $ | 14 | |
The company sells its product for $50 per unit. Due to new regulations, the company must now incur $2 per unit of hazardous waste disposal costs and $8,500 per year of fixed hazardous waste disposal costs. Compute the companys break-even point (in units), including hazardous waste disposal costs.
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