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Kinitwear 1.docx - It is worth noting that variable cost is...

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It is worth noting that variable cost is the main variable in terms of output. In thisregard, variable cost used for production decides the selling price for a short time span. Onthe contrary, fixed cost are most reliable during the critical pricing. As per the illustrationabove, we can comply with the friend of the director for using the idea of marginal costing indetermining the selling price. This is on the given information, the marginal cost (MC) shouldbe added with the labour cost (LC), salary and expenses (SE) and transportation costs (TC).MC= LC+TC+SE28.5+(30*5.5) +4.5+ salary inclusive of the rise and advertising cost = 240198 euros.Based on the above information, in case the company decides to increase productionof the sweater, all the other costs will also increase such as LC and advertising expenses.
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