Saved Exam 4 Ch 23, 24 & 17 6 Chang Industries has 2,300 defective units of prod

Question

Saved Exam 4 Ch 23, 24 & 17 6 Chang Industries has 2,300 defective units of product that have already cost $14.30 each to produce. A salvage company will purchase the defective units as they are for $5.30 each. Chang's production manager reports that the defects can be corrected for $5.70 per unit, enabling them to be sold at their regular market price of $21.60. The incremental income or loss on reworking the units is: 01:12:20 Multiple Choice $24,380 loss. $24,380 income $13.110 loss $37,490 income $36,570 income O Type here to search

Explanation / Answer

1. Answer : $ 24,380 income.

Incremental sales revenue = 2,300 units x $ ( 21.60 - 5.30) = $ 37,490.

Incremental costs = 2,300 units x $ 5.70 = $ 13,110.

Incremental income ( loss) = $ 37,490 - $ 13,110 = $ 24,380.

2. Answer : $ 1.70 cost per unit.

Cost per unit = $ 42.30 - $ 44.00 = $ 1.70.

3. Answer: make as the relevant cost to make it is $ 62.20.

4. Answer: $ 72,030.

Direct Materials $ 9.50 Direct Labor 23.50 Overhead ( $ 15.50 x 60%) 9.30 Relevant Cost to Make per unit $ 42.30

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