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. The Model B2 radio is currently in production and it renders the Model A1 radio obsolete. If the remaining 500 units of the Model A1 radio are to be sold through regular channels, what is the minimum price the company would accept for the radios

Answer 1

Answer:

$4

Explanation:

Calculation to determine the minimum price the company would accept for the radios

Minimum price=Selling costs (40% variable)*$10

Minimum price=$4

Therefore the minimum price the company would accept for the radios will be $4 because it COVER THE VARIABLE SELLING EXPENSE