Classic Loungers Is in the Process of Preparing a Production

question 97

Multiple Choice

Classic Loungers is in the process of preparing a production cost budget for August. Actual costs in July for 200 chaise lounge chairs were: $\begin{array}{lr}\text { Materials cost } & \$ 6,000 \\\text { Labor cost } & 8,000 \\\text { Rent } & 2,000 \\\text { Depreciation } & 4,000 \\\text { Other fixed costs } & 5,000 \\\text { Total } & \$ 25,000\end{array}$ Each chair is sold for $140 in July. The company plans to lower the selling price to $130 per chair at which management estimates that sales will increase to 230 chairs. Materials and labor are the only variable costs. How much is the incremental cost of producing an extra 30 chairs?

• A) $1,900
• B) $2,100
• C) $3,750
• D) $(200)

---

Definitions:

Unlimited Liability

The legal obligation of business owners to pay all of their business debts personally, without limit, which exposes personal assets to risk.

Sole Proprietorship

A business formed by the sole proprietor. It is the easiest business organization to form.

Term Partnership Dissociation

The ending of a partner's association with a partnership for a predetermined term, as outlined by an agreement or law.

RUPA

The Revised Uniform Partnership Act, a set of laws designed to govern the operations of partnerships in the United States.