Question

Mel suddenly finds an opportunity to sell boxed dinners. The new opportunity would require the use of the 30 percent unused capacity. The contribution margin from the dinners would amount to $3,000 annually. Required: a. If Mel decides to sell dinners, what are the total costs for both making and buying the cookies?

Answer 1

$900

Step-by-step explanation:

The computation of the total cost for both making and buying the cookies is given below:

But before that the variable cost per unit is

= (Cost of goods sold - fixed cost) ÷ (sales units)

= ($13,500 - $4,500) ÷ ($180,000 ÷ 6)

= $3

now the total cost is

= 300 × $3

= $900