Quality Chairs Inc. (QC) manufactures chairs for industrial use. Laura Winters, the Vice President for Marketing at QC, concluded from market analysis that sales were dwindling for QC's standard three-foot chair due to aggressive pricing by competitors. QC's chairs sold for $890 whereas the competition's comparable chair was selling for $750. Winters determined that a price drop to $750 would be necessary to regain market share and reach a targeted annual sales level of 10,000 chairs.   Cost data based on sales of 10,000 chairs:     Budgeted Quantity Actual Quantity Actual Cost Direct materials (board feet)   89,700     81,200   $ 1,258,500   Direct labor (hours)   72,200     74,625     876,700   Machine hours (hours)   12,250     12,100     251,700   Finishing and packing (hours)   7,350     7,250     126,700       The current profit per unit is:   Multiple Choice   $588.   $638.   $813.   $788.   $738.

FINANCIAL ACCOUNTING
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Chapter1: Financial Statements And Business Decisions
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Quality Chairs Inc. (QC) manufactures chairs for industrial use. Laura Winters, the Vice President for Marketing at QC, concluded from market analysis that sales were dwindling for QC's standard three-foot chair due to aggressive pricing by competitors. QC's chairs sold for $890 whereas the competition's comparable chair was selling for $750. Winters determined that a price drop to $750 would be necessary to regain market share and reach a targeted annual sales level of 10,000 chairs.

 

Cost data based on sales of 10,000 chairs:

 

  Budgeted Quantity Actual Quantity Actual Cost
Direct materials (board feet)   89,700     81,200   $ 1,258,500  
Direct labor (hours)   72,200     74,625     876,700  
Machine hours (hours)   12,250     12,100     251,700  
Finishing and packing (hours)   7,350     7,250     126,700  
 

 

The current profit per unit is:

 

Multiple Choice
  •  
    $588.
  •  
    $638.
  •  
    $813.
  •  
    $788.
  •  
    $738.
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