Classic Loungers is in the process of preparing a production cost budget for August. Actual costs in July for 400 chaise lounge chairs were: Materials cost $ 6,000 Labor cost 8,000 Rent 2,000 Depreciation 4,000 Other fixed costs 5,000 Total $ 25,000 Material cost and Labor cost are considered variable. Each chair was sold for $160 in July. Management estimates that sales will increase to 440 chairs during August if the company lowers the selling price to $150 per chair. What is the incremental profit (loss) associated with the price reduction?
Classic Loungers is in the process of preparing a production cost budget for August. Actual costs in July for 400 chaise lounge chairs were:
Materials cost $ 6,000
Labor cost 8,000
Rent 2,000
Other fixed costs 5,000
Total $ 25,000
Material cost and Labor cost are considered variable. Each chair was sold for $160 in July. Management estimates that sales will increase to 440 chairs during August if the company lowers the selling price to $150 per chair. What is the incremental
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$(200) |
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$(2,200) |
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$2,100 |
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$800 |
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$600 |
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