The Following Information Relates to a Product Produced by Creamer

question 103

Multiple Choice

The following information relates to a product produced by Creamer Company: Fixed selling costs are $500,000 per year,and variable selling costs are $12 per unit sold.Although production capacity is 600,000 units per year,the company expects to produce only 400,000 units next year.The product normally sells for $120 each.A customer has offered to buy 60,000 units for $90 each.
What is the incremental cost per unit associated with the special order?
$\begin{array}{lr}\text { Direct materials } & \$ 24 \\\text { Direct labour } & 15 \\\text { Variable overhead } & 30 \\\text { Fixed overhead } & 18 \\\text { Unit cost } & \$ 87\end{array}$

• A)$64
• B)$69
• C)$81
• D)$84

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