Northern Digital Inc.The Northern Digital Inc. produces a high-quality computer chip. Unit production costs (based on capacity production of 100,000 units per year) follow: Direct material$50Direct labor20Overhead (20% variable)10Other information: Sales price100SG&A costs (40% variable)15 Refer to Northern Digital, Inc. Assume, for this question only, that the Memory Division is operating at a level of 70,000 chips per year. What is the minimum price that the division would consider on a "special order" of 1,000 chips to be distributed through normal channels?Select one:a. $95b. $100c. $81d. $78

Special order is the one time order which the seller gets in addition of its normal operating level.…

Answered: Direct material $50 Direct labor 20…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Northern Digital Inc.

The Northern Digital Inc. produces a high-quality computer chip. Unit production costs (based on capacity production of 100,000 units per year) follow:

Direct material	$50
Direct labor	20
Overhead (20% variable)	10
Other information:
Sales price	100
SG&A costs (40% variable)	15

Refer to Northern Digital, Inc. Assume, for this question only, that the Memory Division is operating at a level of 70,000 chips per year. What is the minimum price that the division would consider on a "special order" of 1,000 chips to be distributed through normal channels?

Select one:

a. $95

b. $100

c. $81

d. $78

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