A manufacturer operating with excess capacity has been asked to fill a special order at a selling
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Question:
A manufacturer operating with excess capacity has been asked to fill a special order at a selling price of $8.25 per unit. The regular price is $10 per unit. No other use of the currently idle capacity can be found. The manufacturer's usual variable costs per unit are $3.50 for direct materials, $2.50 for direct labor, $1.00 for variable overhead, and $0.75 for sales commission. No sales commission would be paid on this special order. The average fixed overhead cost per unit is $0.85. Under the general decision rule, the minimum price per unit for this special order is
A. $7.75
B. $7.50
C. $7.85
D. $7.00
Related Book For
Business research methods
ISBN: 978-1439080672
8th Edition
Authors: William G Zikmund , Barry J. Babin, Jon C. Carr, Mitch Griff
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