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

question 46

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 the company is already operating at capacity when the special order is received from the overseas customer. What would be the opportunity cost of each unit delivered to the overseas customer?

• A)$9.70.
• B)$7.20.
• C)$8.40.
• D)$32.50.

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Definitions:

Play Stage

A phase in child development, conceptualized by George Herbert Mead, where children begin to take on roles and attitudes of others through play.

Preparatory Stage

A phase in child development according to George Herbert Mead, where children mimic or imitate others without understanding the underlying roles.

Role Stage

The phase or position that an individual occupies in a social structure, often defined by certain expectations, duties, and behaviors associated with that role.

Generalized Other

A concept in sociology referring to the internalized sense of society's values, norms, and expectations.