Question

Henderson Electronics Corporation manufactures and sells FM radios. Information on the prior year's operations (sales and production Model A1) is presented below: Sales price per unit $30 Costs per unit: Direct material 7 Direct labor 4 Overhead (50% variable) 6 Selling costs (40% variable) 10 Production in units 10,000 Sales in units 9,500 Refer to Henderson Electronics Corporation. Assume that the remaining Model A1 radios can be sold through normal channels or to a foreign buyer for $6 per unit. If sold through regular channels, the minimum acceptable price will be

Answer 1

Answer:

the minimum acceptable price is $4

Explanation:

The computation of the minimum acceptable price is shown below:

Here the minimum acceptable price would be considered as a variable selling cost i.e. calculated below:

= Selling cost × variable percentage

= $10 × 40%

= $4

hence, the minimum acceptable price is $4

The same would be considered and relevant too