Solved: If materials cost is 120 per unit and processing will cost, Accounting Basics

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If materials cost is 120 per unit and processing will cost

Question - A company manufactures 1,000,000 units of a product yearly. A new design of the product will reduce materials cost by 12%, but will increase processing cost by 2%. If materials cost is $1.20 per unit and processing will cost $0.40 per unit, how much can the company afford to pay for the preparation of making the new design and making changes in equipment?

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Accounting Basics: If materials cost is 120 per unit and processing will cost

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