Helix Company has been approached by a new customer to provide 2,000 units of its regular product at a special price of $6 per unit. The regular selling price of the product is $8 per unit. Helix is operating at 75% of its capacity of 10,000 units. Identify whether the following costs are relevant to Helix’s decision as to whether to accept the order at the special selling price. No additional fixed manufacturing overhead will be incurred because of this order. The only additional selling expense on this order will be a $0.50 per unit shipping cost. There will be no additional administrative expenses because of this order. Place an X in the appropriate column to identify whether the cost is relevant or irrelevant to accepting this order. Item Relevant Not Relevant a. Selling price of $6.00 per unit b. Direct materials cost of $1.00 per unit c. Direct labor of $2.00 per unit d. Variable manufacturing overhead of $1.50 per unit e. Fixed manufacturing overhead of $0.75 per unit f. Regular selling expenses of $1.25 per unit g. Additional selling expenses of $0.50 per unit h. Administrative expenses of $0.60 per unit
Helix Company has been approached by a new customer to provide 2,000 units of its regular product at a
special price of $6 per unit. The regular selling price of the product is $8 per unit. Helix is operating at
75% of its capacity of 10,000 units. Identify whether the following costs are relevant to Helix’s decision
as to whether to accept the order at the special selling price. No additional fixed manufacturing
will be incurred because of this order. The only additional selling expense on this order will be a $0.50 per
unit shipping cost. There will be no additional administrative expenses because of this order. Place an X in
the appropriate column to identify whether the cost is relevant or irrelevant to accepting this order.
Item Relevant Not Relevant
a. Selling price of $6.00 per unit
b. Direct materials cost of $1.00 per unit
c. Direct labor of $2.00 per unit
d. Variable manufacturing overhead of $1.50 per unit
e. Fixed manufacturing overhead of $0.75 per unit
f. Regular selling expenses of $1.25 per unit
g. Additional selling expenses of $0.50 per unit
h. Administrative expenses of $0.60 per unit
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