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:

Muscle Cramps

Involuntary and often painful contractions of muscles, which can occur in various circumstances, such as exercise, dehydration, or mineral deficiencies.

Intramuscular Calf Veins

Veins located within the muscle tissue of the calf, involved in the circulation of blood back to the heart.

Venous Insufficiency

A condition where the flow of blood up the legs to the heart is inadequate, leading to blood pooling and vein enlargement, often in the legs.

Physiologic Change

Alterations in the body's normal physiological state, often in response to disease, environmental factors, or life stages.