Materials and labor are the only variable costs. under what, Ask an Expert

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Shareef's Window Company is in the process of preparing a production cost budget for August. Actual costs in July for 120 windows were:

Materials cost $ 4,800
Labor cost 3,000
Rent 1,500
Depreciation 2,500
Other fixed costs 3,200
Total $15,000

The company is currently producing and selling 144 windows annually and each window is sold for $140.00. The company is considering lowering the price to $125.00 for which management estimates this will increase sales to 200 windows. Materials and labor are the only variable costs. Under what situation should the company lower the price of its windows?

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Accounting Basics, Accounting

Category:- Accounting Basics
Reference No.:- M980286

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