Suppose the Baseball Hall of Fame in Cooperstown…

Question:

Answer:

(1).Excess capacity of production shall not consider the fixed as it is not relevant cost as it is a sunk cost.

Sales price per unit = $0.33

Less:- Direct material = -$0.13

Direct labor = -$0.04

Variable overhead = -$0.11

Differencial amount per unit = $0.05

Units sold = 55,000

Differencial income = $2,750

(2). The amount spent on the development of hologram to be reused is not a relevant cost for decision making. Hence the differential revenue remains the same at $2,750. Shall be still sold.

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