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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Definitions:

Hertz

A unit of frequency in the International System of Units (SI), equal to one cycle per second.

Decibels

The units of measurement for sound intensity, indicating the loudness of sounds on a logarithmic scale.

Amplitude

The maximum extent of a vibration or oscillation, measured from the position of equilibrium.

Hertz

In the International System of Units (SI), the measure of frequency that is equivalent to one cycle every second.