Assume the company has 50 units left over from last year which have small defects and which will have to be sold at a reduced price as scrap.This would have no effect on the company's other sales.What cost is relevant as a guide for setting a minimum price on these defective units?
A) $1.50 per unit.
B) $3.50 per unit.
C) $5.00 per unit.
D) $6.50 per unit.

Question

Quizplus · Accepted Answer

The relevant cost for setting a minimum price on the defective units is the scrap value, which is $1.50 per unit. This is the minimum amount the company should accept to cover the cost of selling the defective units.

Assume the Company Has 50 Units Left Over from Last