Curvy Confections is considering building a new plant in Europe. It predicts sales at the new plant to be 40,000 units at $9.00/unit. Below is a listing of estimated expenses: A European firm was contracted to sell the product and will receive a commission of 15% of the sales price. No U.S. home office expenses will be allocated to the new facility.
The unit variable cost for Curvy Confections is

Question

Curvy Confections is considering building a new plant in Europe. It predicts sales at the new plant to be 40,000 units at $9.00/unit. Below is a listing of estimated expenses:  A European firm was contracted to sell the product and will receive a commission of 15% of the sales price. No U.S. home office expenses will be allocated to the new facility.
The unit variable cost for Curvy Confections is

Quizplus · Accepted Answer

To find the unit variable cost, we need to deduct the commission paid to the European firm from the sales price ($9.00 - 15% of $9.00 = $7.65). Then, we subtract the total estimated expenses from the adjusted sales price to find the unit variable cost:

$7.65 - $3.51 = $3.14.

Therefore, the unit variable cost for Curvy Confections is $3.14.

Curvy Confections Is Considering Building a New Plant in Europe