Quality Chairs Inc The Current Cost Per Unit Is:
A) $250

question 6

Multiple Choice

Quality Chairs Inc. (QC) manufactures chairs for industrial use. Laura Winters, the Vice President for Marketing at QC, concluded from market analysis that sales were dwindling for QC's standard three-foot chair due to aggressive pricing by competitors. QC's chairs sold for $550 whereas the competition's comparable chair was selling for $495. Winters determined that a price drop to $495 would be necessary to regain market share and reach a targeted annual sales level of 10,000 chairs.
Cost data based on sales of 10,000 chairs:
$\begin{array}{lcc}&\text { Budgeted } & \text { Actual } \\&\text { Quantity } & \text { Quantity }\\\text { Direct materials (board feet) } & 88,000 & 79,500 & \$ 1,250,000 \\\text { Direct labor (hours) } & 71,350 & 73,775 & 875,000 \\\text { Machine hours (hours) } & 11,400 & 11,250 & 250,000 \\\text { Finishing and packing (hours) } & 6,500 & 6,400 & 125,000\end{array}$ The current cost per unit is:

• A) $250.
• B) $300.
• C) $400.
• D) $450.
• E) $475.

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Definitions:

Investment Privately

Allocating financial resources into private enterprises not listed on public stock exchanges.

Maximum Price

The highest price a buyer is willing to pay for a good, service, or financial instrument.

Non-Redeemable GICs

Guaranteed Investment Certificates that cannot be cashed in before their maturity date without incurring a penalty.

Maturity Value

The amount of money an investment will be worth at the end of its term, including the original principal and all accrued interest.