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:

Launched

To set in motion or initiate something, such as a product, project, or spacecraft, into action or into the market.

Balance

The ability to maintain a body's center of gravity within its base of support, vital for everyday activities and sports.

Conscientiousness

A personality trait characterized by diligence, carefulness, and a high level of organization, thoughtfulness, and responsible behavior.

Generativity

A stage of psychological development where individuals focus on guiding the next generation and contributing to society.