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:

Theories of Motivation

A set of interconnected theories that attempt to explain what motivates individuals to act in certain ways, including driving forces behind human behavior and action.

Universal Necessities

are the basic requirements common to all human beings, essential for maintaining life and health.

Self-Determination Theory

A theory of motivation that emphasizes the role of autonomy, competence, and relatedness in fostering intrinsic motivation and psychological growth.

Motivation Autonomous

A form of motivation that comes from within an individual, driving them to engage in activities out of personal interest or internal rewards.