Elhard Company produces a single product. The cost of producing and selling a single unit of this product at the company's normal activity level of 40,000 units per month is as follows:
The normal selling price of the product is $51.10 per unit.
An order has been received from an overseas customer for 2,000 units to be delivered this month at a special discounted price. This order would have no effect on the company's normal sales and would not change the total amount of the company's fixed costs. The variable selling and administrative expense would be $0.10 less per unit on this order than on normal sales.
Direct labor is a variable cost in this company.
-Suppose the company is already operating at capacity when the special order is received from the overseas customer.What would be the opportunity cost of each unit delivered to the overseas customer?
Definitions:
Average Tax Rate
The ratio of total taxes paid to total income, representing the overall percentage of income that is taken by taxes.
Marginal Tax Rate
The rate at which the last dollar of a taxpayer's income is taxed, indicating how much of any additional income will be taken in taxes.
Marginal Tax Rate
The percentage of tax applied to the last dollar earned, reflecting the rate at which each additional dollar of income is taxed.
Additional Income
Earnings received beyond the regular pay or salary, such as bonuses or overtime pay.
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