General Accounting question Donellan Company produces a special gear used in automatictransmissions. Each gear sells for $30, and the company sellsapproximately 500,000 gears each year. Unit cost data for theyear follows:Direct materialDirect labor$9.00$8.00Other costs: Variable FixedManufacturing $3.00$7.00Distribution $5.00$3.00Donellan has received an offer from a foreign manufacturer topurchase 25,000 gears. Domestic sales would be unaffected bythis transaction. If the offer is accepted, variable distributioncosts will increase $1.00 per gear for insurance, shipping, andimport duties. The relevant unit cost to a pricing decision onthis offer is:a) $24.00b) $20.00c) $26.00d) $18.00

Step 1: Define Relevant CostRelevant cost is also known as differential costs that arise from the…

Answered: Donellan Company produces a special…

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter10: Short-term Decision Making

Section: Chapter Questions

Problem 4EB: Dimitri Designs has capacity to produce 30,000 desk chairs per year and is currently selling all...

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