Refer to the facts from question 5; however, in answering this question assume that the company is
Question:
Refer to the facts from question 5; however, in answering this question assume that the company is operating at 100% of its capacity without the special order. If the company normally manufactures only one product that has a contribution margin of
$20 per unit and that consumes 2 minutes of the constrained resource per unit, what is the opportunity cost (stated in terms of forgone contribution margin) of accepting the special order? Assume the special order would require 1.5 minutes of the constrained resource per unit.
a. $25,000
b. $50,000
c. $75,000
d. $100,000
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Related Book For
ISE Introduction To Managerial Accounting
ISBN: 9781260091755
8th Edition
Authors: Peter Brewer, Ray Garrison, Eric Noreen
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