A Company Is Considering a Special Order for 1,000 Units

question 119

Multiple Choice

A company is considering a special order for 1,000 units to be priced at $8.90 (the normal price would be $11.50) .The order would require specialized materials costing $4.00 per unit.Direct labor and variable factory overhead would cost $2.15 per unit.Fixed factory overhead is $1.20 per unit.However, the company has excess capacity and acceptance of the order would not raise total fixed factory overhead.The warehouse, however, would have to add capacity costing $1,300.Which of the following is relevant to the special order?

• A) $11.50 normal selling price
• B) $1.20 fixed factory overhead per unit
• C) $7.35 spent on donuts and coffee
• D) $8.90 selling price per unit of special order
• E) None of these.

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Definitions:

Biotic Potential

The maximum reproductive capacity of an organism under optimum environmental conditions.

Reproduction

The process of producing a new individual of the same kind.

Survival

The ability of an organism to continue living or existing, often despite facing adverse conditions.

Exponential Growth

Growth whose rate becomes ever more rapid in proportion to the growing total number or size.