X Company spent $7,500 on an engineering study that revealed that Product A coul

Question

X Company spent $7,500 on an engineering study that revealed that Product A could be manufactured more efficiently. The new process would result in variable cost savings of $0.83 per unit and additional fixed costs of $3,560. Current variable costs per unit are 3.77, and current fixed costs are $10,730. Last year, X Company sold 3,200 units of Product A at a price of $11.22. At what unit sales level would X Company be indifferent between adopting the new process and not adopting it? Submit Answer Tries 0/3

Explanation / Answer

Sales units at indifferent point = Additional Fixed cost / Savings in Variable OH  

= $350 / 0.83 = 4289 units

Note: The amount spent on the engineerirng study is a sunk cost. Hence, not taken in decision.

Related Questions

Navigate

• Browse (All)
• Browse X
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.