In: Accounting
Peggy Company makes and sells a product that normally sells for $57. Because of a defective machine, 1,000 units were not produced correctly and remain in inventory. Each of the defective unit has the following costs assigned to it by the company's absorption costing system:
Direct materials | $6.00 per unit |
Direct labor | $2.00 per unit |
Variable Overhead | $1.75 per unit |
Fixed Overhead | $1.8 per unit |
The company has two options regarding the defective units: (1) be sold for $8 per unit, or (2) repaired and sold at the regular price.
Q:) What is the minimum cost of repair per unit in order for the company to choose option (1)?
A:) $ _______per unit?