james Lawson's Bed and Breakfast, in a small historic Mississippi town, must decide how to subdivide (remodel) the large old home that will become its inn. There are three alternatives: Option A would modernize all baths and combine rooms, leaving the inn with four suites, each suitable for two to four adults. Option B would modernize only the second floor; the results would be six suites, four for two to four adults, two for two adults only. Option C (the status quo option) leaves all walls intact. In this case, there are eight rooms available, but only two are suitable for four adults, and four rooms will not have private baths. Below are the details of profit and demand patterns that will accompany each option: Annual Profit under Various Demand Patterns Alternatives High p Average p A (modernize all) B (modernize 2nd) C (status quo) This exercise contains only part b. b) The option with the highest expected value for James Lawson's Bed and Breakfast is ▼ B C A , with an expected value of $ nothing (round your response to the nearest whole number).
Answers
Answer:
The numbers are missing, so I looked for a similar question (see attached image).
the expected value for option A (modernize everything) = (0.5 x $90,000) + (0.5 x $25,000) = $57,500the expected value for option B (modernize only second floor) = (0.4 x $80,000) + (0.6 x $70,000) = $74,000the expected value for option C (do nothing) = (0.3 x $60,000) + (0.7 x $33,000) = $41,100The option with the highest expected value is option B (modernize only second floor).
Related Questions
la) State clearly 1 consumer need which is met by "Canadian Living" magazine. Be careful to remember that needs are "states of deprivation" felt by a person
Pls help
Answers
Answer:
Need to perform everyday tasks like cooking.
Explanation:
For example, Canadian Living magazines has a record of often publishing articles related to new cooking recipes that are cheap and affordable.
Many consumers often need information that can help that can assist them in cooking nutritional foods at the best price possible.
A new manufacturing machine is expected to cost $278,000, have an eight-year life, and a $30,000 salvage value. The machine will yield an annual incremental after-tax income of $35,000 after deducting the straight-line depreciation. Compute the accounting rate of return for the investment.
Answers
Answer:
22.7 %
Explanation:
Accounting rate of return = Average Profits / Average Investments × 100
Where,
Average Profit = Sum of Profits ÷ Number of Years
= $35,000
and
Average Investment = (Initial Investment + Salvage Value) ÷ 2
= ($278,000 + $30,000) ÷ 2
= $154,000
Therefore,
Accounting rate of return = $35,000 ÷ $154,000
= 22.7 %
Under the allowance method for uncollectible accounts, the journal entry to record the estimate of uncollectible accounts would include a credit to
Answers
Answer and Explanation:
The journal entry to record the estimation of the uncollectible accounts is shown below:
Bad debt expense XXXX
To Allowance of doubtful debts XXXX
(Being the estimation of the uncollectible account is recorded)
Here the bad debt expense is debited as it increases the expenses account and credited the allowance as it decreased the assets
Hence, the same is to be considered
The value of what a Canadian-owned Tim Hortons produces in South Korea is included in the Canadian ________ and the South Korean ________
Answers
Answer: GNP; GDP
Explanation:
The value of what a Canadian-owned Tim Hortons produces in South Korea is included in the Canadian GNP and the South Korean GDP.
Gross National Product refers to the total amount of domestic production and foreign production that can be attributed to the residents of a nation.
This means that GNP includes the GDP and income earned by residents of the country in other countries but less the income earned by foreigners in the country. For Canada therefore, the value of goods produced by the Canadian company in South Korea will be added to the GNP.
Gross Domestic Product (GDP) on the other hand is simply the total final value of goods and services produced in a country regardless of if it was foreigners or residents doing the production. The value of what a Canadian-owned Tim Hortons produces in South Korea is therefore included in South Korea's GDP.
ear Net Income Profitable Capital Expenditure 1 $ 14 million $ 8 million 2 18 million 11 million 3 9 million 6 million 4 20 million 8 million 5 23 million 9 million The Hastings Corporation has 2 million shares outstanding. (The following questions are separate from each other). a. If the marginal principle of retained earnings is applied, how much in total cash dividends will be paid over the five years? (Enter your answer in millions.)
Answers
Answer:
$42 Million
Explanation:
The computation of the total cash dividend is shown below:-
Year Net Income Profitable capital Expenditure Dividends
1 $14 Million $8 Million $6 Million
2 $18 Million $11 Million $7 Million
3 $9 Million $6 Million $3 Million
4 $20 Million $8 Million $12 Million
5 $23 Million $9 Million $14 Million
Total cash dividends $42 Million
Would you rather own your own business or become a franchise
Answers
Answer:
own a business
Explanation:
I'm able to create my own brand and free to do what I want
Answer:
{: Own My Own Business :}
Explanation:
I would rather own my own business so that I could get lots of money yet give other people money ^w^ It would also be a restaurant. Most likely so I could eat da food as in.. 'taste' da food. :}
A decreasing-cost industry is one in which: a. contraction of the industry will decrease unit costs. b. input prices fall or technology improves as the industry expands. c. the long-run supply curve is perfectly elastic. d. the long-run supply curve is upsloping.
Answers
Answer:
B
Explanation:
When we talk of a decreasing cost industry, we refer to an industry in which the expansion of the industry will lead to a decrease in the unit production cost.
So with respect to the question at hand , the correct answer is that the input prices will fall as industry expands
The case of a a technological improvement is expected to drive a decrease in the input prices for production in the expanding industry
Sherman, Inc. manufactures chainsaws that sell for $65. Each chainsaw uses $14 in direct materials and $9 in direct labor per unit. Sherman has two activities: Machining, which is applied at the rate of $4 per machine hour, and Finishing, which is applied at the rate of $20 per batch. This month, Sherman made 225 chainsaws, using 1,125 machine hours in 45 batches. What is the gross profit for one chainsaw
Answers
Answer: $18
Explanation:
Based on the information,
Sales revenue = $65 × 225 = $14625
Cost of goods sold = (45 × $20) + (1125 × $4) + (225 × $14) + (225 × $9)
= $900 + $4500 + $3150 + $2025
= $10575
Gross profit = Sales revenue - Cost
= $14625 - $10575
= $4050
The gross profit for one chainsaw will be:
= $4050/225
= $18
Forrester Company is considering buying new equipment that would increase monthly fixed costs from $425,000 to $445,500 and would decrease the current variable costs of $60 by $15 per unit. The selling price of $100 is not expected to change. Forrester's current break-even sales are $1,140,000 and current break-even units are 11,400. If Forrester purchases this new equipment, the revised break-even point in dollars would be:
Answers
Answer:
Break-even point (dollars)= $810,000
Explanation:
Giving the following information:
Fixed costs= $445,500
Unitary variable cost= $45
Selling price= $100
To calculate the break-even point in dollars, we need to use the following formula:
Break-even point (dollars)= fixed costs/ contribution margin ratio
Break-even point (dollars)= 445,500 / [(100 - 45) / 100]
Break-even point (dollars)= $810,000
Suppose the banking system has $40 billion in reserves. Also assume that there are no cash leakages or excess reserves. If the central bank lowers the required reserve ratio from 20 percent to 16 percent, the money supply will
Answers
Answer:
Money supply increases by $1.6 billion
Explanation:
The reserve ratio is defined as the amount of a bank's reserves that the central bank of a country expects banks to keep as cash and not lend out.
Reserve ratio is also called cash reserve ratio.
This requirement is put in place in case customers decide to make mass withdrawals.
Central banks tend to control cash supply by increasing or reducing the reserve ratio.
When money to be supplied as loans is to be increased, the reserve ratio reduces so that banks can use more of their reserves for lending rather than for cash withdrawals.
In this instance reserve ratio reduced from 20% to 16%.
That is a 4% reduction
This means 4% of the reserves is freed up for lending or money supply to the public
Extra money supply = 0.04 * 40 billion = $1.6 billion
Money supply increases by $1.6 billion
Examples of how to improve perceptual acuity include: A. A CEO meets with other CEOs of non-competing companies to examine the world from multiple perspectives and then shares the results with his own management team. B. A CEO meets with the company management team regularly to analyze current world events and their potential impact on the company. C. A CEO meets with direct competitors to analyze current industry trends. The CEOs share their conclusions with their respective companies. D. Outsiders are brought in to the board meeting to critique the company strategy, which considers the new information in its potential revamping of the strategy.
Answers
Answer:
The answer is "Option C".
Explanation:
It was its human detector for seeing confusion through the fog because you can respond until others use it. Only a tiny portion of future executives look in and peek over the horizon towards their businesses from the outside to collect signs that could be bringers of shift.
It is also known as the psychological or mental preparedness throughout the external environment that can "see around corners" and spot potentially important phenomena, inconsistencies, and oddities before the others do. To see through all the fog of doubt, it is a radar. so, that you can act first, that's why the choice c is correct.
On January 1, 2020, Echo Company issued $550,000, 16 year, 9%, annual, callable bonds for $475,000. On December 31, 2025, Echo Company redeemed (called) the bonds at 102. REQUIRED: 1. Prepare the Journal Entry to record the Issuance of the Bond 2. Determine the amount of the Discount/Premium that is still not amortized (using the Straight-Line Method) 3. Prepare the Journal Entry to record the Retirement (Redemption) of the Bond.
Answers
Answer:
1. Prepare the Journal Entry to record the Issuance of the Bond
January 1, 2020, bonds issued at a discount
Dr Cash 475,000
Dr Discount on bonds payable 75,000
Cr Bonds payable 550,000
2. Determine the amount of the Discount/Premium that is still not amortized (using the Straight-Line Method)
total bond life = 16 years, 5 years have passed
amortization of bond discount per coupon payment = $75,000 / 16 = $4,687.50
so $51,562.50 have not been amortized yet
3. Prepare the Journal Entry to record the Retirement (Redemption) of the Bond.
Before being able to redeem the bonds, the remaining discount must be amortized:
December 31, 2025, amortization of bond discount
Dr Interest expense 51,562.50
Cr Discount on bonds payable 51,562.50
the journal entry to record the redemption of the bonds
December 31, 2025, bonds redeemed at a loss
Dr Bonds payable 550,000
Dr Loss on retirement of debt 11,000
Cr Cash 561,000
Your grandpa doesn't trust "young 'uns" so you are set to inherit a $1,000,000 trust fund on your 50th birthday. Your Grandpa also doesn't like banks so he has buried the cash somewhere on his 40-acre farm in a location that will be revealed to you by his lawyer since Grandpa will not be around when you turn 50. If you could possibly get your hands on it now (when you are 20), you could put it in a bank at 6% annual interest. If you were able to dig up the money now, how much would you have when you turn 50?
Answers
Answer:
FV= $5,743,491.17
Explanation:
Giving the following information:
Present value (PV)= $1,000,000
Number of periods (n)= 30 years
Annual interest= 6% = 0.06
To calculate the future value (FV), we need to use the following formula:
FV= PV*(1+i)^n
FV= 1,000,000*(1.06^30)
FV= $5,743,491.17
The expected return on the market portfolio is 12%, and the relevant risk-free rate is 4.2%. What is the equity premium?
Answers
Answer:
7.8%
Explanation:
The expected return on the market portfolio is 12 percent
The risk free rate is 4.2 percent
Therefore the equity premium can be calculated as follow
= expected return - risk free rate
= 12% - 4.2%
= 7.8%
Hence the equity premium is 7.8%
Dr. Bob Jackson owns a parcel of land that a local farmer has offered to rent from Dr. Bob for the next 10 years. The farmer has offered to pay $20,000 today or an annuity of $3,200 at the end of each of the next 10 years. Which pay-ment method should Dr. Jackson accept if his required rate of return is 10 percent
Answers
Answer:
Dr. Jackson should accept the $20,000 paid today
Explanation:
you must analyse the present value of both payment options:
the present value of the $20,000 paid today is exactly $20,000the present value of the annuity = $3,200 x 6.1446 (PV annuity factor, 10%, 10 periods) = $19,662.72Since the present value of the immediate cash payment is higher than the annuity payment, Bob should choose that offer.
Prescott Bank offers you a five-year loan for $53,000 at an annual interest rate of 7.75 percent. What will your annual loan payment be
Answers
Answer:
$13,186.84
Explanation:
Use the Time Value of Money Techniques to Solve the Problem
Pv = $53,000
N = 5
i = 7.75 %
Fv = $ 0
P/yr = 1
Pmt = ?
Using a Financial Calculator, the annual loan payment (Pmt) is $13,186.84.
Penny Worth Gaming, a computer enhancement company, has three product lines: audio enhancers, video enhancers, and connection-speed accelerators. Common costs are allocated based on relative sales. A product line income statement follows: Penny Worth Gaming Income Statement For the Year Ended December 31, 2017 Audio Video Accelerators Total Sales $1,200,000 $2,450,000 $2,400,000 $6,050,000 Less cost of goods sold 730,000 1,435,000 2,070,000 4,235,000 Gross margin 470,000 1,015,000 330,000 1,815,000 Less other variable costs 56,570 68,850 21,190 146,610 Contribution margin 413,430 946,150 308,810 1,668,390 Less direct salaries 152,160 164,690 60,340 377,190 Less common fixed costs: Rent 11,970 25,830 25,200 63,000 Utilities 4,370 9,430 9,200 23,000 Depreciation 5,890 12,710 12,400 31,000 Other administrative costs 79,230 170,970 166,800 417,000 Net income $159,810 $562,520 $34,870 $757,200 Since the profit for accelerator devices is relatively low, the company is considering dropping this product line. Determine the annual impact on profit of dropping accelerator products. The company will be off by $ if it drops accelerators.
Answers
Answer:
weogijeognerohi werihjnoeriwhnoerhe
Explanation:
ejfoeiwnjgoerwn yore yoeryjiworik
Exercise 17-5 Assigning costs using ABC LO P3 Xie Company identified the following activities, costs, and activity drivers for this year. The company manufactures two types of go-karts: Deluxe and Basic. Activity Expected Costs Expected Activity Handling materials $ 625,000 100,000 parts Inspecting product 900,000 1,500 batches Processing purchase orders 105,000 700 orders Paying suppliers 175,000 500 invoices Insuring the factory 300,000 40,000 square feet Designing packaging 75,000 2 models Assume that the following information is available for the company’s two products for the first quarter of this year. Deluxe Model Basic Model Production volume 10,000 units 30,000 units Parts required 20,000 parts 30,000 parts Batches made 250 batches 100 batches Purchase orders 50 orders 20 orders Invoices 50 invoices 10 invoices Space occupied 10,000 sq. ft. 7,000 sq. ft Models 1 model 1 model Required: Compute activity rates for each activity and assign overhead costs to each product model using activity-based costing (ABC). What is the overhead cost per unit of each model? (Round activity rate and average OH cost per unit answers to 2 decimal places.)
Answers
Answer:
Instructions are below.
Explanation:
First, we need to calculate the activity rate for each activity:
Predetermined manufacturing overhead rate= total estimated overhead costs for the period/ total amount of allocation base
Handling materials= 625,000/100,000= $6.25 per part
Inspecting product= 900,000/1,500= $600 per batch
Processing= 105,000/700= $150 per order
Paying suppliers= 175,000/500=$350 per invoice
Insuring the factory= 300,000/40,000= $7.5 per square feet
Designing packaging= 75,000/2= $37,500 per model
Now, we can allocate overhead to each model:
Allocated MOH= Estimated manufacturing overhead rate* Actual amount of allocation base
Deluxe:
Handling materials= 6.25*20,000= 125,000
Inspecting product= 600*250= 150,000
Processing= 150*50= 7,500
Paying suppliers= 350*50= 17,500
Insuring the factory= 7.5*10,000= 75,000
Designing packaging= 37,500*1= 37,500
Total allocated overhead= $412,500
Basic:
Handling materials= 6.25*30,000= 187,500
Inspecting product= 600*100= 160,000
Processing= 150*20= 3,000
Paying suppliers= 350*10= 3,500
Insuring the factory= 7.5*7,000= 52,500
Designing packaging= 37,500*1= 37,500
Total allocated overhead= $444,000
Finally, the unitary overhead:
Deluxe= 412,500/10,000= $41.25
Basic= 444,000/30,000= $14.8
Farris Corporation, which has only one product, has provided the following data concerning its most recent month of operations: Selling price $ 78 Units in beginning inventory 0 Units produced 8,800 Units sold 8,700 Units in ending inventory 100 Variable costs per unit: Direct materials $ 18 Direct labor $ 10 Variable manufacturing overhead $ 4 Variable selling and administrative expense $ 5 Fixed costs: Fixed manufacturing overhead $255,200 Fixed selling and administrative expense $ 87,000 What is the unit product cost for the month under absorption costing
Answers
Answer:
$61
Explanation:
The computation of unit product cost for the month under absorption costing is shown below:-
Unit product cost = Direct material + Direct labor + Variable Manufacturing overhead + Fixed manufacturing cost
= $18 + $10 + $4 + ($255,200 ÷ 8,800)
= $61
Therefore for computing the unit product cost for the month under absorption costing we simply applied the above formula.
On October 1, 2020, Jackson Chemical was identified as a potentially responsible party by the Environmental Protection Agency. Jackson's management along with its counsel have concluded that it is probable that Jackson will be responsible for damages, and a reasonable estimate of these damages is $5,000,000. Jackson's insurance policy of $9,000,000 has a deductible clause of $500,000. How should Jackson Chemical report this information in its financial statements at December 31, 2020
Answers
Answer:
Jackson Chemical should report the $5,000,000 loss because we don't know if the insurance will actually pay out the policy.
Explanation:
Jackson chemical has to report $500,000 loss associated with the deductible would be accrued as liability in the company's financial statements at Dec 31, 2020 since it is probably that Jackson will be responsible for the damages.
$500,000 is the amount of the insurance policy's deductible Jackson will have to pay to receive the policy's benefits, which will cover the reasonably estimated damages.
Your pro forma income statement shows sales of , cost of goods sold as , depreciation expense of , and taxes of due to a tax rate of . What are your pro forma earnings? What is your pro forma free cash flow?
Answers
Answer and Explanation:
The computation is shown below:
Particulars Amount($)
Sales 1,033,000
Less:- Cost of goods sold (503,000)
Gross Profit 530,000
Less:- Depreciation (103,000)
EBIT 427,000
Taxes [40% of 427000] (170,800)
Earnings 256,200
1]Proforma earnings = $256200
2]Proforma free cash flow = Earnings + Depreciation
= $256,200 + $103,000
= $359,200
The proforma earnings is $256200 , and the pro-forma free cash flow is the value of earnings before depreciation. Hence the value is $359,200.
Pro Forma income statementwe are provided with the information about:
Sales = 1,033,000
Cost of goods sold = 503,000
Gross Profit = 530,000
Depreciation = 103,000
We need to find, the net profit,
Net Profit = Gross Profit - Depriciation
Net profit = 530000 - 103000 = 427000
Earnings is the amount after deduction of Tax rate (40%)
= 40% of 427000 = 170,800
Earnings = 427000 - 170800 = 256,200
Therefore the Proforma Earning is 256,200, Proforma free cash flow = Earnings + Depreciation
= $256,200 + $103,000
= $359,200
Your Question is incomplete, the complete question is:
Our proforma income statement shows sales of $1,033,000, cost of goods sold as $503,000, depreciation expense of $103,000, and taxes of $170,800 due to a tax rate of 40%. what are your proforma earnings? what is your proforma free cash flow?
Learn more about Depreciation here:
https://brainly.com/question/1287985
Sheridan Company reports:
Cash provided by operating activities $ 329000
Cash used by investing activities 119000
Cash provided by financing activities 139000
Beginning cash balance 92000
What is Sheridan’s ending cash balance?
Answers
Answer: $441,000
Explanation:
The following can be deuced from the question:
Cash provided by operating activities = $329000
Cash used by investing activities = $119000
Cash provided by financing activities = $139000
Beginning cash balance = $92000
Sheridan’s ending cash balance will be:
= Beginning cash balance + cash provided by operating activities + cash provided by financing activities - cash used by operating activities
= $92000 + $329000 + $139000 - $119000
= $441,000
Assume you purchase a Harley-Davidson Corporation bond that pays 5 percent or annual interest of $50 and has a face value of $1000. Also, assume new corporate bond issues of comparable quality are currently paying 6 percent. What is the approximate market value?
Answers
Answer:
$833.33
Explanation:
Annual Interest Paid = $50
Market Interest rate = 6%
The approximate market value = Annual interest paid / Market Interest rate
The approximate market value = $50 / 6%
The approximate market value = $50 / 0.06
The approximate market value = 833.3333333333333
The approximate market value = $833.33
The difference between total factory overhead cost incurred during a period and the total standard factory overhead cost assigned to production of the period is the:______________.
A) Flexible-budget variance.
B) Production-volume variance.
C) Total factory overhead variance.
D) Overhead efficiency variance.
E) Total overhead spending variance.
Answers
Answer: C. Total factory overhead variance
Explanation:
The difference between total factory overhead cost incurred during a period and the total standard factory overhead cost assigned to production of the period is the total factory overhead variance.
Flexible budget variance is the difference that occurs between the results that are gotten by the flexible budget model and the actual results gotten.
Production volume variance is the difference that occurs between the budgeted production volume for a particular company and the actual volume of goods produced.
The correct option is C.
You will invest $25,000 in an ice cream shop your sister is starting. You expect to triple your investment in six years. What is the rate of return that you have in mind? (Rounded to the nearest percent.)
Answers
Answer:
r = 20.09%
Explanation:
we can use the future value formula to calculate the expected rate of return:
future value = present value x (1 + r)ⁿ
future value = $25,000 x 3 = $75,000present value = $25,000n = 6$75,000 = $25,000 x (1 + r)⁶
(1 + r)⁶ = $75,000 / $25,000 = 3
⁶√(1 + r)⁶ = ⁶√3
1 + r = 1.2009
r = 0.2009 = 20.09%
Mr. C made the following gifts: $12,000 to a university to pay tuition costs for his niece. An undeveloped tract of land to his sister that had an adjusted basis to Mr. C of $4,000 and a fair market value of $25,000. Various shares of stock to his wife that had an adjusted basis to Mr. C of $15,000 and a fair market value of $40,000. Mr. C did not consent to gift-splitting. What is the total amount of taxable gifts
Answers
Answer:
$10,000
Explanation:
Gifts are only taxed when their fair market value is higher than $15,000. Any gifts made to your spouse are not taxable. Gift taxes are calculated on a per person base, as long as they do not exceed the lifetime exemption (which is $11.58 million).
The tuition costs of her niece are not taxable since they are less than $12,000. The stocks given to his wife are not taxable either. The only taxable gift is the land given to his sister which had a FMV of $25,000. The taxable amount = $25,000 - $15,000 = $10,000
Cutting flights and declaring bankruptcy are long-run decisions. What impact would you predict these actions would have on the airlines remaining in business?
Answers
Answer:
Follows are the solution to this question:
Explanation:
The declaration of bankruptcy as well as flight cutting reduces the amount for flights and also the flight sin operation leading to both a supply reduction. While the business continued, its other airlines will have an increased engagement and thus higher prices and will be seeing recovery for both the airline industry over an amount of time.
Doug and Sue Click file a joint tax return and decide to itemize their deductions. The Clicks' income for the year consists of $89,000 in salary, $1,500 interest income, and $700 long-term capital loss. The Clicks' expenses for the year consist of $1,450 investment interest expense. Assuming that the Clicks' marginal tax rate is 35 percent, what is the amount of their investment interest expense deduction for the year
Answers
Answer:
$1,450
Explanation:
Interest Income = $1,500
Investment Interest expenses = $1,450
Allowed deduction limit investment interest is subject to investment income. So $1,450 is allowed as deduction
ou can buy property today for $2.1 million and sell it in 6 years for $3.1 million. (You earn no rental income on the property.) a. If the interest rate is 11%, what is the present value of the sales price? (Do not round intermediate calculations. Enter your answer in millions rounded to 3 decimal places.)
Answers
Answer:
PV= $1,657,386.6
Explanation:
Giving the following information:
Future Value (FV)= $3,100,000
Interest rate (i)= 11%
Number of periods (n)= 6 years
To calculate the present value of the selling price, we need to use the following formula:
PV= FV/(1+i)^n
PV= 3,100,000 / (1.11^6)
PV= $1,657,386.6
Division A makes a part that it sells to customers outside of the company. Data concerning this part appear below: Selling price to outside customers $ 40 Variable cost per unit $ 30 Total fixed costs $ 10,000 Capacity in units 20,000 Division B of the same company would like to use the part manufactured by Division A in one of its products. Division B currently purchases a similar part made by an outside company for $38 per unit and would substitute the part made by Division A. Division B requires 5,000 units of the part each period. Division A has ample capacity to produce the units for Division B without any increase in fixed costs and without cutting into sales to outside customers. If Division A sells to Division B rather than to outside customers, the variable cost be unit would be $1 lower. What is the lowest acceptable transfer price Division A should accept
Answers
Answer:
Lower selling price= $29
Explanation:
Giving the following information:
Selling price to outside customers $40
Variable cost per unit $ 30
Total fixed costs $10,000
Capacity in units 20,000
The variable cost per unit would be $1 lower.
Because there is unused capacity, and it won't affect other sales. We will not take into account the fixed costs.
The lower selling price is the one that equals the unitary variable cost.
Unitary variable cost= 30 - 1= $29
Lower selling price= $29