Quantum Manufactures Parts That Are Used in the Production of Washers

question 28

Multiple Choice

Quantum manufactures parts that are used in the production of washers and dryers. The following costs are associated with Part No. 41: $\begin{array} { | l | l | } \hline \text { Direct materials } & \$ 60 \\\hline \text { Direct labour } & 29 \\\hline \text { Variable manufacturing overhead } & 32 \\\hline \text { Fixed manufacturing overhead } & 10 \\\hline \text { Variable selling costs } & 9 \\\hline\end{array}$ The company has received a special-order inquiry from an appliance manufacturer in Portugal for 16,000 units of Part No.41. A total of 30% of Quantum's fixed manufacturing overhead can be avoided on the order, and the variable selling costs per unit will amount to only $6. The minimum price that Quantum should charge the Portuguese manufacturer is:

• A)$127.
• B)$130.
• C)$134.
• D)$137.
• E)$140.

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Definitions:

CCA Class

Denotes the category of depreciable property a business asset falls into in Canada, determining the rate of depreciation for tax purposes.

Net Advantage to Leasing

The total financial benefit of leasing an asset, comparing the costs of leasing versus buying.

Resale Value

The estimated market value at which an asset can be sold in the future.