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014. A company produces a single product. The cost of producing and selling a single unit of this product at the company's normal activity level of 40,000 units per month is as follows: Direct Materials. .. Direct Labor.... . $6.80 Variable Manufacturing OH.. $2.40 Fixed Manufacturing OH. .$11.60 Variable S&A. . . $1.90 Fixed S&A... . $.10 The normal selling price of the product is $51.10 per unit. An order has been received from an overseas customer for 2,000 units to be delivered this month at a special discounted price. This order would not change the total amount of the company's fixed costs. The variable selling and administrative expense would be $0.10 less per unit on this order than on normal sales. Direct labor is a variable cost in this company. Suppose there is not enough idle capacity to produce all of the units for the overseas customer and accepting the special order would require cutting back on production of 200 units for regular customers. The minimum acceptable price per unit for the special order is: a) $31.20 b) $29.11 c) $51.00 d) $45.70 e) $29.00

014. A company produces a single product. The cost of producing and selling a single unit of this product at the company's normal activity level of 40,000 units per month is as follows: Direct Materials. .. Direct Labor.... . $6.80 Variable Manufacturing OH.. $2.40 Fixed Manufacturing OH. .$11.60 Variable S&A. . . $1.90 Fixed S&A... . $.10 The normal selling price of the product is $51.10 per unit. An order has been received from an overseas customer for 2,000 units to be delivered this month at a special discounted price. This order would not change the total amount of the company's fixed costs. The variable selling and administrative expense would be $0.10 less per unit on this order than on normal sales. Direct labor is a variable cost in this company. Suppose there is not enough idle capacity to produce all of the units for the overseas customer and accepting the special order would require cutting back on production of 200 units for regular customers. The minimum acceptable price per unit for the special order is: a) $31.20 b) $29.11 c) $51.00 d) $45.70 e) $29.00

Practical Management Science
Practical Management Science
6th Edition
ISBN:9781337406659
Author:WINSTON, Wayne L.
Publisher:WINSTON, Wayne L.
Chapter2: Introduction To Spreadsheet Modeling
Section: Chapter Questions
Problem 20P: Julie James is opening a lemonade stand. She believes the fixed cost per week of running the stand...
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014. A company produces a single product. The cost of producing and selling a single unit of this product at the company's normal activity level of 40,000 units per month is as follows: Direct Materials. .. Direct Labor.... . $6.80 Variable Manufacturing OH.. $2.40 Fixed Manufacturing OH. .$11.60 Variable S&A. . . $1.90 Fixed S&A... . $.10 The normal selling price of the product is $51.10 per unit. An order has been received from an overseas customer for 2,000 units to be delivered this month at a special discounted price. This order would not change the total amount of the company's fixed costs. The variable selling and administrative expense would be $0.10 less per unit on this order than on normal sales. Direct labor is a variable cost in this company. Suppose there is not enough idle capacity to produce all of the units for the overseas customer and accepting the special order would require cutting back on production of 200 units for regular customers. The minimum acceptable price per unit for the special order is: a) $31.20 b) $29.11 c) $51.00 d) $45.70 e) $29.00
Transcribed Image Text:014. A company produces a single product. The cost of producing and selling a single unit of this product at the company's normal activity level of 40,000 units per month is as follows: Direct Materials. .. Direct Labor.... . $6.80 Variable Manufacturing OH.. $2.40 Fixed Manufacturing OH. .$11.60 Variable S&A. . . $1.90 Fixed S&A... . $.10 The normal selling price of the product is $51.10 per unit. An order has been received from an overseas customer for 2,000 units to be delivered this month at a special discounted price. This order would not change the total amount of the company's fixed costs. The variable selling and administrative expense would be $0.10 less per unit on this order than on normal sales. Direct labor is a variable cost in this company. Suppose there is not enough idle capacity to produce all of the units for the overseas customer and accepting the special order would require cutting back on production of 200 units for regular customers. The minimum acceptable price per unit for the special order is: a) $31.20 b) $29.11 c) $51.00 d) $45.70 e) $29.00
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