A Manufacturer Operating with Excess Capacity Has Been Asked to Fill

question 124

Multiple Choice

A manufacturer operating with excess capacity has been asked to fill a special order at $7.25 per unit. No other use of the currently idle capacity can be found. The manufacturer's usual variable costs per unit are $3.50 for direct materials, $1.50 for direct labour, $1.50 for variable overhead, and $0.50 for sales commission. No sales commission would be paid on this special order. The average overhead per unit is $0.25.
The expected contribution margin per unit for the special order is:

• A) $0.00
• B) $0.25
• C) $0.75
• D) $1.00

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Definitions:

Diabetic Retinopathy

An eye condition resulting from diabetes complications that affects the retina's blood vessels, leading to potential blindness.

Retinopathy

Damage to the retina of the eye, which can cause vision impairment.

Prematurity

Prematurity refers to a birth that occurs before the 37th week of pregnancy, often resulting in health challenges for the baby.

Eales Disease

A rare condition characterized by inflammation, thrombosis, and retinal vasculature abnormalities, possibly leading to retinal detachment.