Falcon Co Produces a Single Product

question 131

Multiple Choice

Falcon Co. produces a single product. Its normal selling price is $30.00 per unit. The variable costs are $19.00 per unit. Fixed costs are $25,000 for a normal production run of 5,000 units per month. Falcon received a request for a special order that would not interfere with normal sales. The order was for 1,500 units with a special price of $20.00 per unit. Falcon has the capacity to handle the special order, and for this order, a variable selling cost of $1.00 per unit would be eliminated.
Should the special order be accepted?

• A) cannot determine from the data given
• B) yes
• C) no
• D) there would be no difference in accepting or rejecting the special order

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Falicov

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