A Manufacturer Operating with Excess Capacity Has Been Asked to Fill

question 65

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. Assume there is no excess capacity (i.e., the company can sell every unit that it produces to regular customers) . Under the general decision rule, the minimum price per unit for this special order would be

• A) $10.00
• B) $7.25
• C) $5.75
• D) $6.50

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Definitions:

Polysynaptic Reflex

A reflex arc that involves multiple synapses between neurons within the central nervous system, leading to a more complex response.

Cross Extension Reflex

A reflex action that involves the contraction of extensor muscles in one limb when the flexor muscles are contracted in the opposite limb, crucial for coordinated locomotion.

Golgi Tendon Reflex

A protective reflex mechanism that helps prevent muscle and tendon damage by relaxing the muscle when too much tension is applied.

Largest Nerve

The sciatic nerve, which runs from the lower back down through the leg, is considered the largest nerve in the human body.