A Manufacturer Operating with Excess Capacity Has Been Asked to Fill

question 23

Multiple Choice

A manufacturer operating with excess capacity has been asked to fill a special order at $7.25 per unit. The regular price is $10 per unit. No other use of the currently idle capacity can be found. The manufacturer's usual variable costs per unit are $3.50 for direct materials, $2.00 for direct labor, $1.00 for variable overhead, and $0.50 for sales commission. No sales commission would be paid on this special order. The average fixed overhead cost per unit is $0.25. Under the general decision rule, the minimum price per unit for this special order is

• A) $7.25
• B) $6.50
• C) $7.00
• D) $7.50

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Definitions:

Whigs

A political party active in the 19th century United States that advocated for federal government support of internal improvements and a national bank.

Federal Government

The national government of the United States, created by the Constitution, that encompasses the executive, legislative, and judicial branches.

Welfare Of The People

The general health, happiness, and safety of the population, often considered a primary goal of government policies and social programs.

Liberty

The condition in society where one faces no oppressive limitations from authorities on their lifestyle, conduct, or political stances.