A Company Normally Sells a Product for $20 Per Unit

question 86

True/False

A company normally sells a product for $20 per unit.Variable per unit costs for this product are: $2 direct materials,$4 direct labor,and $1.50 variable overhead.The company is currently operating at 70% of capacity producing 14,000 units per year.Total fixed costs are $42,000 per year.The company should not accept a special order for 2,000 units which would be sold for $10 per unit because there would be an incremental loss on the order.

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Definitions:

M1

A category of the money supply that includes all physical currency, demand deposits, traveler's checks, and other checkable deposits.

U.S. Treasury

The federal department responsible for managing government revenue, including producing currency, managing national accounts, and administering public finance.

Currency

A system of money in general use in a particular country for the exchange of goods and services.

Federal Reserve

The Federal Reserve, often referred to as "the Fed," is the central banking system of the United States, responsible for setting monetary policy, regulating banks, maintaining financial stability, and providing banking services to governmental agencies.