(Whether to explore or not the foreign market). A company annually manufactures 10,000 units of a product at a cost of $ 4 per unit and there is home market for consuming the entire volume of production at the sale price of $ 4.25 per unit. In the year 2019, there is a fall in the demand for home market which can consume 10,000 units only at a sale price of $ 3.72 per unit. The analysis of the cost per 10,000 units i : $ $ Material 15,000 Fixed overheads 8,000 Wages 11,000 Variable overheads 6,000 The foreign market is explored and it is found that this market can consume 20,000 units of the product if offered at a sale price of $ 3.55 per unit. It is also discovered that for additional 1000 units of the product (over initial 10,000 units) the fixed overheads will increase by 10%. Is it worthwhile to try to capture the foreign market ?
(Whether to explore or not the foreign market). A company annually manufactures 10,000 units of a product at a cost of $ 4 per unit and there is home market for consuming the entire volume of production at the sale price of $ 4.25 per unit. In the year 2019, there is a fall in the demand for home market which can consume 10,000 units only at a sale price of $ 3.72 per unit. The analysis of the cost per 10,000 units i : $ $ Material 15,000 Fixed overheads 8,000 Wages 11,000 Variable overheads 6,000 The foreign market is explored and it is found that this market can consume 20,000 units of the product if offered at a sale price of $ 3.55 per unit. It is also discovered that for additional 1000 units of the product (over initial 10,000 units) the fixed overheads will increase by 10%. Is it worthwhile to try to capture the foreign market ?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
![(Whether to explore or not the foreign market). A company annually manufactures 10,000 units of a
product at a cost of $ 4 per unit and there is home market for consuming the entire volume of production
at the sale price of $ 4.25 per unit. In the year 2019, there is a fall in the demand for home market which
can consume 10,000 units only at a sale price of $ 3.72 per unit. The analysis of the cost per 10,000 units
i :
$
$
Material
15,000
Fixed overheads
8,000
Wages
11,000
Variable overheads
6,000
The foreign market is explored and it is found that this market can consume 20,000 units of the product if
offered at a sale price of $ 3.55 per unit. It is also discovered that for additional 1000 units of the product
(over initial 10,000 units) the fixed overheads will increase by 10%. Is it worthwhile to try to capture the
foreign market ?](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F444634cf-7e9b-4b64-9025-562567e02c42%2Ff91a41fd-418d-4fc0-b0fa-afed6f2befa3%2Ftpp8s2b_processed.jpeg&w=3840&q=75)
Transcribed Image Text:(Whether to explore or not the foreign market). A company annually manufactures 10,000 units of a
product at a cost of $ 4 per unit and there is home market for consuming the entire volume of production
at the sale price of $ 4.25 per unit. In the year 2019, there is a fall in the demand for home market which
can consume 10,000 units only at a sale price of $ 3.72 per unit. The analysis of the cost per 10,000 units
i :
$
$
Material
15,000
Fixed overheads
8,000
Wages
11,000
Variable overheads
6,000
The foreign market is explored and it is found that this market can consume 20,000 units of the product if
offered at a sale price of $ 3.55 per unit. It is also discovered that for additional 1000 units of the product
(over initial 10,000 units) the fixed overheads will increase by 10%. Is it worthwhile to try to capture the
foreign market ?
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