Landor Appliance Corporation makes and sells electric fans. Each fan regularly sells for $48. The following cost data per fan is based on a full capacity of 151,000 fans produced each period. Direct materials Direct labor $7 $9 Manufacturing overhead (50% variable and 50% unavoidable fixed) $6 A special order has been received by Landor for a sale of 25,000 fans to an overseas customer. The only selling costs that would be incurred on this order would be $6 per fan for shipping. Landor is now selling 126,000 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? Multiple Choice $25 per fan $28 per fan $23 per fan $19 per fan
Landor Appliance Corporation makes and sells electric fans. Each fan regularly sells for $48. The following cost data per fan is based on a full capacity of 151,000 fans produced each period. Direct materials Direct labor $7 $9 Manufacturing overhead (50% variable and 50% unavoidable fixed) $6 A special order has been received by Landor for a sale of 25,000 fans to an overseas customer. The only selling costs that would be incurred on this order would be $6 per fan for shipping. Landor is now selling 126,000 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? Multiple Choice $25 per fan $28 per fan $23 per fan $19 per fan
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Landor Appliance Corporation makes and sells electric fans. Each fan regularly sells for $48. The following cost data per fan is based on a full capacity of 151,000 fans produced each period.
Direct materials
Direct labor
$7
$9
Manufacturing overhead (50% variable and 50% unavoidable fixed)
$6
A special order has been received by Landor for a sale of 25,000 fans to an overseas customer. The only selling costs that would be incurred on this order would be $6 per fan for shipping. Landor is now selling
126,000 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?
Multiple Choice
$25 per fan
$28 per fan
$23 per fan
$19 per fan
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