A Company Normally Sells a Product for $25 Per Unit

question 5

True/False

A company normally sells a product for $25 per unit. Variable per unit costs for this product are: $3 direct materials, $5 direct labor, and $2 variable overhead. The company is currently operating at 100% of capacity producing 30,000 units per year. Total fixed costs are $75,000 per year. The company should accept a special order for 1,000 units which would be sold for $13 per unit because the special order price exceeds variable costs.

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Definitions:

Stroop Task

A task invented by J. R. Stroop in which a participant sees a list of words (color terms) printed in an ink color that differs from the word named (e.g., green printed in blue ink). The participant is asked to name the ink colors of the words in the list and demonstrates great difficulty in doing so relative to a condition in which non-color words form the stimuli.

Prototype

An original model or first form of something from which other forms are copied or developed.

Exemplar

An individual instance or example that is representative of a category or concept, often used in models of categorization in cognitive psychology.