The Following Are the Jensen Corporation's Unit Costs of Making

question 28

Multiple Choice

The following are the Jensen Corporation's unit costs of making and selling an item at its capacity of 1, 000 units per month: Present sales amount to 700 units per month.Fixed costs, both manufacturing and selling and administrative, are constant within the relevant range between 700 units and 1, 000 units.Direct labor is a variable cost. Assume the company has 50 units left over from last year which have small defects and which will have to be sold at a reduced price.The sale of these defective units will have no effect on the company's other sales.Which of the following costs may be relevant in this decision?

• A)variable manufacturing cost
• B)unit product cost
• C)variable selling and administrative cost
• D)full cost

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