Mars Manufacturing produces “invisible” electric dog fences, sold through retail locations nationwide. The selling price of the fence is $150 per unit. The cost to manufacture and market the fences is shown below. These figures represent the cost at the company’s normal volume of 3,000 units per month. Unit Manufacturing Costs Variable materials $ 15.00 Variable labor $ 17.50 Variable overhead $ 12.50 Fixed overhead $ 16.00 Total unit manufacturing costs $ 61.00 Unit Marketing Costs Variable $ 12.00 Fixed overhead $ 17.00 Total unit marketing costs $ 29.00 Total unit costs $ 90.00 At the end of the year the production manager is taking inventory and finds 600 units of an older model of invisible fencing that the company no longer manufactures. These obsolete units can be disposed of through their regular channels, thereby incurring variable marketing expenses. What is the lowest price that they should accept for these obsolete units, realizing that if they do not sell them these units will have to be thrown away. (Show all supporting calculations)

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Related questions

Question

Mars Manufacturing produces “invisible” electric dog fences, sold through retail locations nationwide. The selling price of the fence is $150 per unit. The cost to manufacture and market the fences is shown below. These figures represent the cost at the company’s normal volume of 3,000 units per month.

Unit Manufacturing Costs
	Variable materials	$ 15.00
	Variable labor	$ 17.50
	Variable overhead	$ 12.50
	Fixed overhead	$ 16.00
Total unit manufacturing costs		$ 61.00
Unit Marketing Costs
	Variable		$ 12.00
	Fixed overhead	$ 17.00
Total unit marketing costs		$ 29.00
	Total unit costs		$ 90.00 At the end of the year the production manager is taking inventory and finds 600 units of an older model of invisible fencing that the company no longer manufactures. These obsolete units can be disposed of through their regular channels, thereby incurring variable marketing expenses. What is the lowest price that they should accept for these obsolete units, realizing that if they do not sell them these units will have to be thrown away. (Show all supporting calculations).

Expert Solution

Trending now

This is a popular solution!

Step by step

Solved in 2 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.

Similar questions