Please show work, thanks so much The following are the Jensen Corporation\'s uni
ID: 2486094 • Letter: P
Question
Please show work, thanks so much
The following are the Jensen Corporation's unit costs of making and selling an Item at a volume of 1,900 units per month (which represents the company's capacity): Present sales amount to 1,150 units per month. An order has been received from a customer in a foreign market for 190 units. The order would not affect current sales. Fixed costs, both manufacturing and selling and administrative, are constant within the relevant range between 1,150 units and 1,900 units. The variable selling and administrative expenses would have to be incurred on this special order as well as for all other sales. Direct labor is a variable cost. Assume the company has 95 units left over from last year which have small defects and which will have to be sold at a reduced price for scrap. The sale of these defective units will have no effect on the company's other sales. Which of the following costs is relevant in this decision? $6.20 variable manufacturing cost $6.50 unit product cost $2.90 variable selling and administrative cost $10.10 full costExplanation / Answer
The 95 units left over from last year which have small defects and which will have to be sold at a reduced price for scrap.
In this case, the units have defects and sold at reduced price.
In this case, the cost incurred towards Direct Material, Direct Labour and Manufacturing overhead are Irrelevent and no use. The only relevent cost is Varaible Selling and administrative Cost.
Thereofre, the Answr is $ 2.90 Varaible Selling and Administrative Cost.