The following table provides the ABC report for product KJ-29.

The firm currently sells 6,000 units of KJ-29 for $16 per unit.

Required:
The firm is considering lowering the price of KJ-29 to $15.25 per unit. Because this action will increase sales by 25%, the firm is also considering increasing the batch size to 750 units. Compute expected profit if the firm implements bothactions.

Transcribed Image Text:

Costper Total Cost fur Unit/Batch 6,000 Units Item Detail Unit-level expenses Material Material-related overhead Direct labor Direct labor-related overhead Traced 10% of materials cost $0.52 0.05 4.40 5.28 120% of direct labor cost Machine-related overhead ($16.50/Machine. hr) Total per unit Batch-level expenses (12 batches) Setup Production order Material moves Total per batch Product-level Facility-level expenses 2.12 $74,220 $35 per hour S145 per order $23.50/move $350.00 145.00 188.00 683.00 8,196 945 expenses $0.01 per $ of unit level costs 742 $84,103 $14.017 Total cost Cost per unit