34. Quality Chairs Inc. (QC) manufactures chairs for industrial use. Leura Winte

Question

34. Quality Chairs Inc. (QC) manufactures chairs for industrial use. Leura Winters, the Vice President for Marketing at QC, concluded from market analysis that sales were dwindling for acs standard three-foot chair due to aggressive pricing by competitors. oc's chairs sold for S550 wherees the competition's comparable chair was selling for $495. Winters determined that a price drop to $495 would be necessary to regain market share and annual sales of 10,000 chairs. Cost data based on sales of 10,000 chairs Direct materials (board feet) Direct labor thours) Machine hours (hours) Finishing and packing thours) Budgeted Quantity Actual Quantity Actual Cost 79,500$1,250,000 875,000 250,000 125,000 88,000 71,350 11,400 6,500 73775 11250 6,400 The current profit per unit is: O $250 O $300 O $400 $450. O $475 16

Explanation / Answer

Ans:Option B $300

Sales (550*10000) 5500000 Direct material 1250000.0 direcct Labor 875000 Machine Hours 250000 Finishing and packing 125000 Total cost 2500000.0 Total Profit 3000000.0 Profit per unit = 3000000/10000 = $300

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