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Calculate the relevant incremental cost of making each unit: $

Calculate the relevant incremental cost of making each unit: $

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Daily Kneads, Inc., is thinking about having one of its products made by a supplier. The supplier will charge $6,000 for 1,000 units. Currently, Daily Kneads' costs to make 1,000 units of this product are as follows: Cost per unit Cost of 1,000 units Direct labor $4 $4,000 Direct materials $1 $1,000 Allocated Unavoidable Fixed Costs $2 $2,000 Total costs $7 $7,000 Calculate the relevant incremental cost of making each unit: $ per unit
Transcribed Image Text:Daily Kneads, Inc., is thinking about having one of its products made by a supplier. The supplier will charge $6,000 for 1,000 units. Currently, Daily Kneads' costs to make 1,000 units of this product are as follows: Cost per unit Cost of 1,000 units Direct labor $4 $4,000 Direct materials $1 $1,000 Allocated Unavoidable Fixed Costs $2 $2,000 Total costs $7 $7,000 Calculate the relevant incremental cost of making each unit: $ per unit
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