Ask Question
17 February, 07:21

A customer has offered Premium Co. $800 per unit for 100 units. To fill the order, Chris would incur unit-level costs of $600 per unit and batch-level costs of $15,000. Premium Co. also incurred $20,000 of product-level costs to design the bench and $200,000 of facility-level costs. Calculate the amount of differential cost.

+2
Answers (1)
  1. 17 February, 10:07
    0
    The amount of differential cost is the difference between the cost that Premium Co. incurs to produce a batch of 100 benches and the cost that the customer is willing to incur to get those 100 benches.

    Customer's cost = 800 dollar x 100 units = $80,000

    Premium Co.'s cost = ($600 x 100units = $60,000) + ($15,000) + ($20,000 x 100units = $2,000,000) + ($200,000)

    This is equal to $2,275,000

    The differential cost is therefore

    $2,275,000 - $80,000 = $2,195,000
Know the Answer?
Not Sure About the Answer?
Find an answer to your question ✅ “A customer has offered Premium Co. $800 per unit for 100 units. To fill the order, Chris would incur unit-level costs of $600 per unit and ...” in 📘 Business if you're in doubt about the correctness of the answers or there's no answer, then try to use the smart search and find answers to the similar questions.
Search for Other Answers