A Company Is Currently Operating at 75% Capacity and Producing

question 41

Multiple Choice

A company is currently operating at 75% capacity and producing 3,000 units. Current cost information relating to this production is shown in the table below.
$$\begin{array} { | l | c | } \hline & \text { Per Unit } \\\hline \text { Sales price } & \$ 43 \\\hline \text { Direct material } & \$ 7 \\\hline \text { Direct labor } & \$ 6 \\\hline \begin{array} { l } \text { Variable } \\\text { overhead }\end{array} & \$ 4 \\\hline \text { Fixed overhead } & \$ 4 \\\hline\end{array}$$
The company has been approached by a customer with a request for a 200 unit special. 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 $43 per unit.
• B) Any amount over $17 per unit.
• C) Any amount over $21 per unit.
• D) Any amount over $13 per unit.
• E) Any amount over $22 per unit.

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Definitions:

Abrasions

Wounds caused by scraping or wearing away of the skin, usually superficial and not penetrating deeply into the body.

Ectoderm

The outermost layer of cells or tissue of an embryo in early development, giving rise to the formation of the nervous system and skin.

Sensory Organs

Parts of the body that are specialized to detect and respond to various stimuli like sight, sound, smell, taste, and touch.

Nervous System

An intricate network of nerves and cells transmitting signals between different parts of the body, coordinating bodily functions and responses.