Delta 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 60,000 units per year is: Direct materials $ 10.00 Direct labor $ 3.00 Variable manufacturing overhead $ 2.00 Fixed manufacturing overhead $ 4.00 Variable selling and administrative expense $ 2.50 Fixed selling and administrative expense $ 2.40 The normal selling price is $25 per unit. The company’s capacity is 75,000 units per year. An order has been received from a mail-order house for 10,000 units. What is the minimum price that should be charged per unit for this special order? a $25 b $23.90 c $15 d $17.50

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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Delta 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 60,000 units per year is:

Direct materials $ 10.00

Direct labor $ 3.00

Variable manufacturing overhead $ 2.00

Fixed manufacturing overhead $ 4.00

Variable selling and administrative expense $ 2.50

Fixed selling and administrative expense $ 2.40

The normal selling price is $25 per unit. The company’s capacity is 75,000 units per year. An order has been received from a mail-order house for 10,000 units. What is the minimum price that should be charged per unit for this special order?

a $25

b $23.90

c $15

d $17.50

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