The Young Company Has Gathered the Following Information for a Unit

question 80

Multiple Choice

The Young Company has gathered the following information for a unit of its most popular product:
$$\begin{array} { | l | r | } \hline \text { Direct materials } & \$ 12 \\\hline \text { Direct labor } & 6 \\\hline \text { Overhead (40\% variable) } & 10 \\\hline \text { Cost to manufacture } & 28 \\\hline \text { Desired markup (60\%) } & 14 \\\hline \text { Target selling price } & \$ 42 \\\hline\end{array}$$
The above cost information is based on 10,000 units.A distributor has offered to buy 2,000 units at a price of $32 per unit.The distributor claims this special order would not disturb regular sales at $42.Special packaging and other selling expenses would be an additional $0.50 per unit for the special order.How many units of regular sales could be lost before this contract is not profitable?

• A) 0 units.
• B) 950 units.
• C) 1,000 units.
• D) 2,000 units.

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Definitions:

Urinary Tract Infection

An infection in any part of the urinary system, including kidneys, ureters, bladder, and urethra, commonly caused by bacteria.

Diabetes Mellitus

A group of diseases characterized by high levels of blood glucose resulting from defects in insulin production, insulin action, or both.

Nephron

The structural and functional unit of the kidney, with each kidney containing approximately 1 million nephrons.

Glomerulus

A collection of capillary vessels within the kidney involved in the initial formation of urine.