Haskins Company Is Currently Operating at a Loss of $15,000

question 97

Multiple Choice

Haskins Company is currently operating at a loss of $15,000.The sales manager has received a special order for 5,000 units of product,which normally sells for $35 per unit.Costs associated with the product are: direct material,$6; direct labor,$10; variable overhead,$3; applied fixed overhead,$4; and variable selling expenses,$2.The special order would allow the use of a slightly lower grade of direct material,thereby lowering the price per unit by $1.50 and selling expenses would be decreased by $1.If Haskins wants this special order to increase the total net income for the firm to $10,000,what sales price must be quoted for each of the 5,000 units?

• A)$23.50
• B)$24.50
• C)$27.50
• D)$34.00

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Definitions:

Financing Activities

Transactions and business events that affect long-term liabilities and equity of a company, including issuance of shares, buyback of shares, and loans taken or given.

Operating Activities

Business activities directly related to the production and delivery of goods and services.

Depreciation

The process of allocating the cost of a tangible asset over its useful life, reflecting the asset's wear and tear, deterioration, or obsolescence.

Accounts Payable

Liabilities of a business that represent amounts owed to creditors for goods and services the company has received but not yet paid for.