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Kando Company incurs a $12.00 per unit cost for Product A, which it currently manufactures and sells for $13.50 per unit.
Instead of manufacturing and selling this product, the company can purchase Product B for $5.00 per unit and sell it for $12.00 per unit.
If it does so, unit sales would remain unchanged and $5.00 of the $12.00 per unit costs assigned to Product A would be eliminated.
Prepare Incremental cost analysis. Should the company continue to manufacture Product A or purchase Product B for resale?
(Round your answers to 2 decimal places.)
Determine the materials price variance (amount and favorable or unfavorable)? Evaluate materials quantity variance (amount and favorable or unfavorable)? Determine the labor rate variance (amount and favorable or unfavorable)?
Identify any problem that you see in the company's standard cost system or in the manner in which cost variances are assigned to the responsible managers.
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