Chapter 11, Problem 11.17MCQ

Special order, opportunity cost. Chade Corp. is considering a special order brought to it by a new client. If Chade determines the variable cost to be $9 per unit, and the contribution margin of the next best alternative of the facility to be $5 per unit, then if Chade has:

1. a. Full capacity the company will be profitable at $4 per unit.
2. b. Excess capacity, the company will be profitable at $6 per unit.
3. c. Full capacity the selling price must be greater than $5 per unit.
4. d. Excess capacity, the selling price must be greater than $9 per unit.