A Company Is Currently Operating at 75% Capacity and Producing

question 84

Multiple Choice

A company is currently operating at 75% capacity and producing 3,000 units.Current cost information relating to this production is shown in the table below: $$\begin{array} { | l | c | } \hline & \text { Per Urit } \\\hline \text { Sales price } & \$ 43 \\\hline \text { Direct rraterial } & \$ 7 \\\hline \text { Direct labor } & \$ 6 \\\hline \begin{array} { l } \text { Variable } \\\text { overhead }\end{array} & \$ 4 \\\hline \text { Fixed overhead } & \$ 4 \\\hline\end{array}$$ The company has been approached by a customer with a request for a 200-unit special.What is the minimum per unit sales price that management would accept for this order if the company wishes to increase current profits?

• A)Any amount over $43 per unit.
• B)Any amount over $17 per unit.
• C)Any amount over $21 per unit.
• D)Any amount over $13 per unit.
• E)Any amount over $22 per unit.

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Definitions:

Professional Bureaucracy

An organizational structure characterized by highly specialized jobs and a high degree of formalization, often found in professional fields like law, medicine, and education.

Decentralized Form

An organizational structure where decision-making authority is distributed among various levels rather than being concentrated at the top.

Operating Core

The essential, mission-critical part of an organization responsible for producing its main outputs or services.

Contextual Variables

A set of four characteristics that influence the success of an organization’s design.