Peters Company Produces a Product with the Following Unit Cost

question 48

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.
-Total incremental cost associated with the special order is

• A) $1,237,500.
• B) $1,342,000.
• C) $1,387,500.
• D) $1,425,000.

---

Definitions:

Patient-visits

The total number of times patients visit a healthcare provider or facility for services.

Revenue

The total amount of income generated by the sale of goods or services related to a company's primary operations, before any expenses are deducted.

Spending Variances

Differences between the budgeted or planned amounts of spending and the actual amounts spent.

Patient-visits

The total number of times patients are seen or treated by healthcare professionals, typically measured for a specific period.