Sasha Cat Company Sells One of Its Products for $100

question 73

Multiple Choice

Sasha Cat Company sells one of its products for $100 each.Sales volume averages 750 units per year.Recently,its main competitor reduced the price of its product to $80.Sasha Cat Company expects sales to drop dramatically unless it matches the competitor's price.In addition,the current profit per unit must be maintained.Information about the product (for production of 750) is as follows: $\begin{array}{lrrr} &\underline{\text { SQ}}&\underline{\text { AQ}}& \underline{\text { Actual Cost}}\\\text { Materials (kilograms) } & 2,000 & 2,500 & \$ 25,000 \\\text { Labour (hours) } & 450 & 500 & 12,500 \\\text { Setups (hours) } & 0 & 600 & 7,500 \\\text { Material handling (moves) } & 0 & 300 & 3,750 \\\text { Warranties (number repaired) } & 0 & 200 & 15,000\end{array}$
What is the non-value-added cost per unit?

• A)$38.33
• B)$40.47
• C)$41.67
• D)$43.33

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Definitions:

Copyright

A legal right granted to the creator of original works of authorship, such as literary, dramatic, musical, artistic works, and certain other intellectual property, to publish, use, and sell their creation for a specified period of time.

Patent

A government grant giving an inventor exclusive rights to make, use, or sell an invention for a specified period in exchange for public disclosure of the invention.

Trademark

A legal designation of exclusive use of a brand or product name.

Goodwill

An intangible asset that represents the portion of the business value that cannot be attributed to other business assets.