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Assume that the company expects to produce 15,000 units of product during the coming year.
Question 1: What average cost per unit and what total cost would you expect the company to incur for direct materials at this level of activity? For factory depreciation? (In preparing your answer, assume that direct materials is a variable cost and that depreciation is a fixed cost; also assume that depreciation is computed on a straight-line basis.)
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XYZ is marketing a new product at the end of 2015. The product will sell for $4 per unit and costs $3 per unit to manufacture. As a marketing incentive.
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