Brand X Computers Makes and Sells Computers Brand X Is Considering a Special Order for a Sale

question 63

Multiple Choice

Brand X Computers makes and sells computers.Each computer sells for $400.The following cost data per computer are based on a full capacity of 10,000 computers each period: $$\begin{array} { l r } \text { Direct materials } & \$ 150 \\\text { Direct labor } & \$ 100 \\\text { Variable manufacturing overhead } & \$ 38 \\\text { Unavoidable fixed overhead } & \$ 12\end{array}$$ Brand X is considering a special order for a sale of 2,500 computers to an overseas customer.The only selling costs that would be incurred for the order would be shipping charges of $15 per computer.Brand X is currently selling 7,500 computers through its regular orders.What should be the minimum selling price per computer in negotiating a price for the special order?

• A)$303
• B)$250
• C)$300
• D)$265
• E)$315

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Definitions:

Succeeding Fiscal Years

The periods following the current fiscal year, typically referring to future financial or budgetary planning years.

Lessor's Implicit Rate

The interest rate a lessor effectively charges a lessee in a lease agreement, often used to calculate the present value of minimum lease payments.

Incremental Borrowing Rate

The interest rate a company would have to pay if it borrows funds to finance a lease or purchase of an asset.

Discount

A reduction from the usual cost of something, often applied to incentivize purchase.