Wagner Company Sells Product a for $21 Per Unit A Special Order Offering to Buy 20,000 Units Has Been

question 53

Multiple Choice

Wagner Company sells product A for $21 per unit. full capacity of 200,000 units is as follows: $$\begin{array} { | l | c | } \hline \text { Direct materials } & \$ 4 \\\hline \text { Direct labour } & 5 \\\hline \text { Manufacturing overhead } & 6 \\\hline \text { Unit product cost } & \underline { \$ 15 } \\\hline\end{array}$$ A special order offering to buy 20,000 units has been received from a foreign distributor. The only selling costs that would be incurred on this order would be $2 per unit for shipping. Wagner has sufficient idle capacity to manufacture the additional units.
Two-thirds of the manufacturing overhead is fixed and would not be affected by this order. Assume that direct labour is an avoidable cost in this decision. In negotiating a price for
The special order, the minimum acceptable selling price per unit should be:

• A)$15.
• B)$17.
• C)$16.
• D)$13.

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Definitions:

Obedient

The quality of willingly complying with orders, requests, or laws.

Uninvolved

A parenting or caregiving style characterized by a low level of responsiveness and communication, combined with limited emotional involvement or supervision.

Negligent

Failing to take proper care in doing something, leading to harm or injury to others.

Sexual Maturation

The process of acquiring sexual maturity and reaching reproductive capability.