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

question 36

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 there is not enough idle capacity to produce all of the units for the overseas customer,and accepting the special order would require cutting back on production of 700 units for regular customers.The minimum acceptable price per unit for the special order is closest to which of the following?

• A) $63.78.
• B) $69.10.
• C) $78.90.
• D) $86.10.

Comprehend the potential positive and negative effects of conflict in organizations.

Understand the concepts of various variances related to overhead, labor, and material costs.

Calculate total overhead variance, labor price and quantity variances, and materials price and quantity variances.

Determine the impacts of actual costs versus standard costs on production budgeting.

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Definitions:

Stock Market

A marketplace where stocks (shares of ownership in businesses) are bought and sold.

Return on Sales

A financial metric used to evaluate a company's operational efficiency by dividing net income by revenue.

Financial Statements

Documents that provide an overview of a company's financial condition, including the balance sheet, income statement, and cash flow statement.

Stock Market

A trading platform where shares, representing ownership in companies, are exchanged.