Mckerchie Inc

question 20

Multiple Choice

Mckerchie Inc. manufactures industrial components. One of its products, which is used in the construction of industrial air conditioners, is known as G62. Data concerning this product are given below: The above per unit data are based on annual production of 9,000 units of the component. Direct labor can be considered to be a variable cost.
-The company has received a special,one-time-only order for 300 units of component G62.There would be no variable selling expense on this special order and the total fixed manufacturing overhead and fixed selling and administrative expenses of the company would not be affected by the order.Assuming that Mckerchie has excess capacity and can fill the order without cutting back on the production of any product,what is the minimum price per unit on the special order below which the company should not go?

• A)$26
• B)$67
• C)$55
• D)$160

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Definitions:

Disembedding

Disembedding is a social theory concept referring to the process by which social relations are lifted out of local contexts and restructured across indefinite spans of time-space, a phenomenon characteristic of modernity.

Formal Rationality

Involves clear, methodical processes and rules designed to achieve objectives efficiently and is often contrasted with substantive rationality.

Urbanization

The process by which rural areas become urban, involving an increase in the percentage of people living in urban areas compared to rural areas.

Money Economy

A system where goods and services are exchanged primarily through the medium of money, rather than through barter.