Chapter 13, Problem 18P

To determine

Relevant Cost: Relevant Costs pertain to costs that need to be incurred if a decision regarding producing a product in excess of normal capacity has to be taken. Thus, it ignores all unavoidable fixed costs, and costs which have to be incurred irrespective of whether excess units are produced until maximum capacity is exhausted. If maximum capacity is exhausted to produce the said units, they will become relevant costs.

Profitability of Production of units under different scenarios.