Meco Company Produces a Product That Has a Regular Selling

question 83

Multiple Choice

Meco Company produces a product that has a regular selling price of $360 per unit. At a typical monthly production volume of 2,000 units, the product's average unit cost of goods sold amounts to $270. Included in this average is $120,000 of fixed manufacturing costs. All selling and administrative costs are fixed and amount to $30,000 per month. Meco Company has just received a special order for 1,000 units at $240 per unit. The buyer will pay transportation, and the regular selling price will not be affected if Meco accepts the order.
Assuming Meco Company has excess capacity, the effect on profits of accepting the order would be

• A) $60,000 increase.
• B) $60,000 decrease.
• C) $30,000 increase.
• D) $30,000 decrease.

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Definitions:

Medicated IVPB

Intravenous piggyback, a method of delivering medication that is diluted in a small amount of fluid and infused through an intravenous line.

EID

Electronic Identification, a method used to identify individuals, animals, products, or entities electronically.

Milliliters Per Hour

A unit of measure representing the flow rate of fluids, often used in medical IV drips.

Slow Flow Rate

A term often used in medical contexts to describe the deliberate reduction in the speed at which fluids or medications are administered intravenously.