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155 - 15-5 15-15 No the $60 per unit manufacturing cost...

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15-5 15-15 No, the $60 per unit manufacturing cost which was incurred to produce the 40,000 barbeque grills is not relevant. This is a past cost. It has already been incurred and its total amount cannot be affected by a decision regarding to whom to sell the grills. The only costs and revenues which would be relevant are the future costs and revenues which differ between the alternatives. The following would be relevant: (1) Sales revenue (2) Sales promotion or advertising costs (3) Shipping costs (4) Storage and handling costs (5) Property taxes and insurance on the grills in inventory (6) Clerical costs associated with prolonged domestic sales 15-16 Alternative 1: to store the rafts and sell them next year Sales 10,500* rafts @ $9 $94,500 Storage costs (8,500) Profit to be earned $86,000 *[15,000 - (0.30 x 15,000)] = 10,500 rafts
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