
FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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HotPie's Bakery's #1 selling product is the Walder Pie. Use this financial information to answer the question.
Sales and Cost Information for Walder Pies
Financial Information at 80% capacity | Units and Per Unit Costs | Dollars |
---|---|---|
Sales | 10,000 | 50,000 |
Direct Materials | 1.00 | 10,000 |
Direct Labor | 1.60 | 16,000 |
Variable OH | 0.50 | 5,000 |
Fixed OH | 0.75 | 7,500 |
HotPie has discovered that 10% of the time, the chef forgets to brown the butter, making the Walder Pies defective. They can sell the pies to Ramsey Bolton to feed to his dogs for $2/pie. Alternatively, they can rework the pies for an additional per unit cost of $1 in direct materials, $2 in direct labor and $0.10 in variable
How much will HotPie make if they sell the defective pies to Ramsey Bolton?
Group of answer choices
1,000
1,250
5,000
2,000
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