Regal Manufacturing produces an unfinished product at a cost of $135 per unit ($100 variable costs, $35 fixed costs). The selling price of the unfinished unit is $170. The company has excess capacity and can finish the unit to sell for $220, but doing so will increase variable costs by 50%. What is the additional net income per unit to be gained by finishing the unit? a. $12 b. $40 c. $45 d. $35

EBK CONTEMPORARY FINANCIAL MANAGEMENT
14th Edition
ISBN:9781337514835
Author:MOYER
Publisher:MOYER
Chapter14: Capital Structure Management In Practice
Section14.A: Breakeven Analysis
Problem 7P
Question

Answer me please

Regal Manufacturing produces an unfinished product at a
cost of $135 per unit ($100 variable costs, $35 fixed
costs). The selling price of the unfinished unit is $170. The
company has excess capacity and can finish the unit to
sell for $220, but doing so will increase variable costs by
50%.
What is the additional net income per unit to be gained by
finishing the unit?
a. $12
b. $40
c. $45
d. $35
Transcribed Image Text:Regal Manufacturing produces an unfinished product at a cost of $135 per unit ($100 variable costs, $35 fixed costs). The selling price of the unfinished unit is $170. The company has excess capacity and can finish the unit to sell for $220, but doing so will increase variable costs by 50%. What is the additional net income per unit to be gained by finishing the unit? a. $12 b. $40 c. $45 d. $35
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