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Landor Appliance Corporation makes and sells electric fans. Each fan regularly sells for $32. based on a full capacity of 160,000 fans produced each period. $9 $9 Manufacturing overhead (50% variable and 50% unavoidable fixed) $6 Direct materials Direct labor A special order has been received by Landor for a sale of 30,000 fans to an overseas customer. The only selling costs that would be incurred on this order would be $3 per fan for shipping. Landor is now selling 130,000 fans through regular channels each period. Assume that direct labor is an avoidable cost in this decision. What should Landor use as a minimum selling price per fan in negotiating a price for this special order? O $24 per fan O $21 per fan $28 per fan O $22 per fan 14

Landor Appliance Corporation makes and sells electric fans. Each fan regularly sells for $32. based on a full capacity of 160,000 fans produced each period. $9 $9 Manufacturing overhead (50% variable and 50% unavoidable fixed) $6 Direct materials Direct labor A special order has been received by Landor for a sale of 30,000 fans to an overseas customer. The only selling costs that would be incurred on this order would be $3 per fan for shipping. Landor is now selling 130,000 fans through regular channels each period. Assume that direct labor is an avoidable cost in this decision. What should Landor use as a minimum selling price per fan in negotiating a price for this special order? O $24 per fan O $21 per fan $28 per fan O $22 per fan 14

FINANCIAL ACCOUNTING
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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Landor Appliance Corporation makes and sells electric fans. Each fan regularly sells for $32. The following cost data per fan is based on a full capacity of 160,000 fans produced each period. $9 $9 Manufacturing overhead (50% variable and 50% unavoidable fixed) $ 6 Direct materials Direct labor A special order has been received by Landor for a sale of 30,000 fans to an overseas customer. The only selling costs that would be incurred on this order would be $3 per fan for shipping. Landor is now selling 130,000 fans through regular channels each period. Assume that direct labor is an avoidable cost in this decision. What should Landor use as a minimum selling price per fan in negotiating a price for this special order? O $24 per fan O $21 per fan O $28 per fan O $22 per fan
Transcribed Image Text:Landor Appliance Corporation makes and sells electric fans. Each fan regularly sells for $32. The following cost data per fan is based on a full capacity of 160,000 fans produced each period. $9 $9 Manufacturing overhead (50% variable and 50% unavoidable fixed) $ 6 Direct materials Direct labor A special order has been received by Landor for a sale of 30,000 fans to an overseas customer. The only selling costs that would be incurred on this order would be $3 per fan for shipping. Landor is now selling 130,000 fans through regular channels each period. Assume that direct labor is an avoidable cost in this decision. What should Landor use as a minimum selling price per fan in negotiating a price for this special order? O $24 per fan O $21 per fan O $28 per fan O $22 per fan
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