A company has the choice of either selling 600 apples or processing them into applesauce.The company could sell the apples as they are for $2.00 per unit.Alternatively,each apple could be made into one unit of applesauce with incremental costs of $0.60 per unit for direct materials,$1.00 per unit for direct labor,and $0.80 per unit for overhead,and then sold for $5.00 each.
-What is the amount of incremental cost from processing the apples into applesauce?
A)$3.00 per unit.
B)$5.00 per unit.
C)$7.00 per unit.
D)$2.40 per unit.
E)$0.60 per unit.

Question

Quizplus · Accepted Answer

The incremental costs for processing the apples into applesauce are the sum of the direct materials, direct labor, and overhead costs per unit, which are $0.60 + $1.00 + $0.80 = $2.40 per unit.

A Company Has the Choice of Either Selling 600 Apples