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Zarrin [17]
3 years ago
6

Chang Industries has 2,000 defective units of product that already cost $14 each to produce. A salvage company will purchase the

defective units as is for $5 each. Chang's production manager reports that the defects can be corrected for $6 per unit, enabling them to be sold at their regular market price of $21. The $14 per unit is a: Multiple Choice Sunk cost. Period cost. Out-of-pocket cost. Opportunity cost. Incremental cost.
Business
1 answer:
lidiya [134]3 years ago
5 0

Answer:

A sunk cost is the correct answer to this question.

Explanation:

Sunk cost:- Sunk costs are those expenses that have been accumulated in the past and are thus in some way unrelated to judgment-making.

In the question referred to above, the company has already made $14 to produce. This cost will be inconsequential even if the company makes the units as it is or procedures them further.

As a result, $14 is a sunk expense.

Other options are incorrect because they are not related to the given scenario.

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Answer:

Unitary variable cost= $40

Total variable cost= $800,000

Explanation:

Giving the following information:

Direct materials $ 10 per unit

Direct labor $ 20 per unit

Overhead costs for the year Variable overhead $ 10 per unit

Fixed overhead $ 160,000

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Unitary variable cost= direct material + direct labor + manufacturing overhead= 10 + 20 + 10= $40

Total variable cost= 20000units* 40= $800,000

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