Classic Loungers is in the process of preparing a production cost budget for August. Actual costs in
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Question:
Classic Loungers is in the process of preparing a production cost budget for August. Actual costs in July for 200 chaise lounge chairs were:
Materials cost $ 6,000
Labor cost 8,000
Rent 2,000
Depreciation 4,000
Other fixed costs 5,000
Total $25,000
Each chair was sold for $140 in July. Management estimates that sales will increase to 250 chairs during August if the company lowers the selling price to $130 per chair. Materials and labor are the only variable costs. How much is the incremental revenue associated with the price reduction?
Expert Answer:
Answer To calculate the incremental revenue associated with the price reduction we firs... View the full answer
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