Stanley's Candies is considering building a new plant in Europe.It predicts sales at the new plant to be 40,000 units at $4.00/unit.Below is a listing of estimated expenses:

A European firm was contracted to sell the product and will receive a commission of 10% of the sales price.No U.S.home office expenses will be allocated to the new facility.
The unit variable cost for Stanley's Candies is

Question

Stanley's Candies is considering building a new plant in Europe.It predicts sales at the new plant to be 40,000 units at $4.00/unit.Below is a listing of estimated expenses:

A European firm was contracted to sell the product and will receive a commission of 10% of the sales price.No U.S.home office expenses will be allocated to the new facility.
The unit variable cost for Stanley's Candies is

Quizplus · Accepted Answer

C)
Category Total Exps %Fixed Total fixed Total Variable
Materials $20,000 10% 2,000 18,000
Labor $30,000 20% 6,000 24,000
Overhead $50,000 40% 20,000 30,000
Market/Admin $10,000 60% 6,000 4,000
Total 110,000 34,000 76,000
Commissions ( 40,000 units × $4.00 × 10%)16,000
Total variable expense 92,000
Unit variable costs (92,000 / 40,000 units)= $2.30

Stanley's Candies Is Considering Building a New Plant in Europe