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Eley Company Produces a Single Product The Normal Selling Price of the Product Is

question 87

Multiple Choice

Eley Company produces a single product. The cost of producing and selling a single unit of this product at the company's normal activity level of 40,000 units per month is as follows:
$\begin{array}{|l|r|}\hline \text { Direct Materials } & \$ 42.60 \\\hline \text { Direct Labour } & \$ 8.10 \\\hline \text { Variable Manufacturing Overhead } & \$ 1.10 \\\hline \text { Fixed Manufacturing Overhead } & \$ 17.30 \\\hline \text { Variable Selling \& Administrative Expense } & \$ 1.8 \\\hline \text { Fixed Selling \& Administrative Expense } & \$ 8.00 \\\hline\end{array}$
The normal selling price of the product is $\$ 86.10$ per unit.An order has been received from an overseas customer for 2,000 units to be delivered this month at a special discounted price. This order would have no effect on the company's normal sales and would not change the total amount of the company's fixed costs. The variable selling and administrative expense would be $1.20 less per unit on this order than on normal sales.

Direct labour is a variable cost in this company.

-Suppose the company is already operating at capacity when the special order is received from the overseas customer.What would be the opportunity cost of each unit delivered to the overseas customer?

Definitions:

Diurnal Animals

Animals most active during the day (e.g., pigeons). Compare with crepuscular animals and nocturnal animals.

Navigation

Involves the use of cues to change direction when necessary in order to reach a specific destination; requires a sense of direction, called compass sense, and an awareness of location, called map sense.

Compass Sense

An ability observed in some animals, allowing them to navigate using Earth's magnetic field.

Map Sense

An inherent ability to understand and navigate the spatial environment, often used in reference to animals or humans who can orient themselves without explicit landmarks.