(CMA) Callow Company Has Considerable Excess Manufacturing Capacity

question 105

Multiple Choice

(CMA) Callow Company has considerable excess manufacturing capacity. A special job order's cost sheet includes the following allocated manufacturing overhead costs: The fixed costs include a normal $7,400 allocation for in-house design costs, although no in-house design will be done. Instead, the job will require the use of external designers costing $15,500. What is the total amount to be included in the calculation to determine the minimum acceptable price for the job?

• A) $73,000
• B) $81,500
• C) $108,000
• D) $116,100

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Definitions:

Hurricane

A tropical cyclone with winds exceeding 74 mph, typically characterized by rain, thunderstorms, and strong winds.

Inferior Good

A type of good for which demand decreases when consumer income rises, unlike normal goods, for which the opposite is observed.

Demand Curve

A graphical representation showing the relationship between the price of a good and the quantity demanded by consumers at those prices.

Supply Curve

A graphical representation showing the relationship between the quantity of goods that producers are willing to sell and the price of those goods.