Question 1 of 1 Cold Company makes large containers of ice cream at a variable c

Question

Question 1 of 1 Cold Company makes large containers of ice cream at a variable cost of $10 per container. It usually sells the container for $15. Cold Company is operating at less than full capacity. A potential new customer is requesting containers of ice cream at a selling price of $12. Cold Company can fill this order without affecting the existing sales or fixed costs. What are the relevant benefits and costs in this decision? Select the correct answer(s). Multiple boxes may be checked if needed. O Variable costs of $10 per container . Current selling price of $15 and variable costs of $10 per container New selling price of $12 and variable costs of $10 per container Current selling price of $15, new selling price of $10, variable costs of $10 per container Slide 3 A

Explanation / Answer

Relevant costs are costs which are done only for the specific project. These includes variable cost of production and relevant fixed costs which are done for decision making

In the present scenario, fixed costs are sunk costs and are not relevant for decision making as these costs have already been incurred by the company. So, the only relevant cost is the variable cost per unit of $10

Benefits of the decision is the selling price which is being offered that is $12

So, as per above discussion, option C is the correct option

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