Eley Corporation Produces a Single Product

question 136

Multiple Choice

Eley Corporation 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 $86.10 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 not change the total amount of the company's fixed costs.The variable selling and administrative expense would be $1.20 less per unit on this order than on normal sales.
Direct labor is a variable cost in this company.
What is the contribution margin per unit on normal sales?

• A)$32.50
• B)$8.40
• C)$9.70
• D)$7.20

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Definitions:

Expectancy Theory

A psychological theory that describes the motivational relationship between people's expectations for success, their perceived efforts, and their ultimate performance.

Rewards

The benefits or compensation received in recognition of one's effort, achievement, or service.

Performance

The act of carrying out a task or function; how well an individual or group meets established goals or standards.

Dysfunctional Methods

Ineffective or harmful practices or techniques that hinder the achievement of objectives or damage organizational culture.