# The Prescott Company produces a light-weight wind breaker with the fol.docx

3. Feb 2023
1 von 2

### The Prescott Company produces a light-weight wind breaker with the fol.docx

• 1. The Prescott Company produces a light-weight wind breaker with the following per unit costs: Direct MaterialsÂ Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â \$4.00 Direct LaborÂ Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â 1.00 Variable OverheadÂ Â Â Â Â Â Â Â Â Â Â Â Â 1.75 Fixed OverheadÂ Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â 2.00 Total Unit CostÂ Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â \$8.75 While production capacity for the next year is 200,000 units, Prescott expects to produce only 170,000. The fixed selling costs total \$85,000 per year and variable selling costs are \$0.5 for each unit sold. The wind breakers usually sell for \$12 each. A customer from outside of Prescott Solution Note: Fixed overhead is calculated on total capacity i.e for 2,00,000 unis 2. 1.if prescott Company produces same no. of units i.e 1,70,000 units & sold 20,000 units to new customer & balance units of 1,50,000 units to its old customer than there is increase in profit by \$ 10,000 Hence it can except this proposal