Reference: 09-05
Eley Company Produces a Single Product The Normal Selling Price of the Product Is $86

question 73

Multiple Choice

Reference: 09-05
Eley Company produces a single product. The cost of producing and selling a single unit of this product at the company's normal activity level of 40,000 units per month is as follows: $$\begin{array} { | l | c | } \hline \text { Direct materials } & \$ 42.60 \\\hline \text { Direct labour } & 8.10 \\\hline \text { Variable manufacturing overhead } & 1.10 \\\hline \text { Fixed manufacturing overhead } & 17.30 \\\hline \text { Variable selling \& administrative expense } & 1.80 \\\hline \text { Fixed selling \& administrative expense } & 8.00 \\\hline\end{array}$$ The normal selling price of the product is $86.10 per unit.
An order has been received from an overseas customer for 2,000 units to be delivered this month at a special discounted price. This order would have no effect on the company's normal sales and would not change the total amount of the company's fixed costs. The variable selling and administrative expense would be $1.20 less per unit on this order than on normal sales. Direct labour is a variable cost in this company.
-Suppose there is not enough idle capacity to produce all of the units for the overseas customer and accepting the special order would require cutting back on production of 700 units for regular customers. The minimum acceptable price per unit for the special order is closest to:

• A)$86.10.
• B)$69.10.
• C)$63.78.
• D)$78.90.

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Definitions:

Listening Skills

The ability to accurately receive and interpret messages in the communication process, essential for effective understanding and interaction.

Nonverbal Communication

The process of conveying a message without the use of words, through gestures, facial expressions, body language, and other visual cues.

Communication Roles

The specific functions or parts individuals play in the process of communicating, such as sender, receiver, or mediator.

Nonverbal Signals

Forms of communication without words, including gestures, facial expressions, body language, and tone of voice, which can convey messages or emotions.