A Company Is Currently Operating at 80% Capacity Producing 5,000

question 132

Multiple Choice

A company is currently operating at 80% capacity producing 5,000 units. Current cost information relating to this production is shown in the table below.
$$\begin{array} { | l | c | } \hline & \text { Per Unit } \\\hline \text { Sales price } & \$ 34 \\\hline \text { Direct material } & \$ 2 \\\hline \text { Direct labor } & \$ 3 \\\hline \begin{array} { l } \text { Variable } \\\text { overhead }\end{array} & \$ 4 \\\hline \text { Fixed overhead } & \$ 5 \\\hline\end{array}$$
The company has been approached by a customer with a request for a 100 unit special order. What is the minimum per unit sales price that management would accept for this order if the company wishes to increase current profits?

• A) Any amount over $34 per unit.
• B) Any amount over $20 per unit.
• C) Any amount over $14 per unit.
• D) Any amount over $9 per unit.
• E) Any amount over $5 per unit.

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