CompuTronics,a Manufacturer of Computer Peripherals,has Excess Capacity

question 67

Multiple Choice

CompuTronics,a manufacturer of computer peripherals,has excess capacity.The company's Utah plant has the following per-unit cost structure for item no.89:
The traceable fixed administrative cost was incurred at the Utah plant;in contrast,the allocated administrative cost represents a "fair share" of CompuTronics' corporate overhead.Utah has been presented with a special order of 5,000 units of item no.89 on which no selling cost will be incurred.The proper relevant cost in deciding whether to accept this special order would be:

• A)$40.
• B)$59.
• C)$61.
• D)$80.
• E)some other amount.

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Definitions:

Consideration

In contract law, something of value given by one party in exchange for something of value from another party, forming the basis for a contract.

Binding Contract

An agreement between parties that is legally enforceable in a court of law.

Commitment

The state or quality of being dedicated to a cause, activity, or undertaking.

Standard Of Care

The degree of attentiveness, caution, and prudence that a reasonable person would reasonably be expected to do in similar circumstances.