Peters Company Produces a Product with the Following Unit Cost

question 73

Multiple Choice

Peters Company produces a product with the following unit cost.
Fixed selling costs are $600,000 per year and variable selling costs are $1.50 per unit sold.
Production capacity is 500,000 units per year. However, the company expects to produce only 300,000 units next year. The product normally sells for $15 each. A customer has offered to buy 150,000 units for $10 each. The units would be sold in an area outside the market area currently served.
-The incremental cost per unit associated with the special order is

• A) $8.00.
• B) $9.25.
• C) $9.50.
• D) $10.00.

---

Definitions:

Dissolved Phosphorus

Phosphorus that is in a soluble form in water, available to organisms for uptake and essential for biological processes such as energy transfer.

Decomposition

The process by which organic substances are broken down into simpler organic or inorganic matter, primarily by microbial action.

Trophic Level

The position an organism occupies in a food chain, based on its feeding habits.

Tertiary Consumers

Organisms that occupy the top level in a food chain by feeding on secondary consumers; they are typically predators.