14. The following information relates to a product produced by Marigold Company: Direct materials $20 Direct...
14. The following information relates to a product produced by Marigold Company:
Direct materials $20 Direct labor 10 Variable overhead 20 Fixed overhead 15
Unit cost $65 Fixed selling costs are $650,000 per year, and variable selling costs are $10 per unit sold.
Although production capacity is 400,000 units per year, the company expects to produce only 250,000 units next year.
The product normally sells for $100 each. A customer has offered to buy 40,000 units for $80 each.
The incremental cost per unit associated with the special order is:
a.$60. b.$84. c.$90. d.$76.
Homework Answers
The incremental cost for special order is the sum of all variable cost associate with the product.
The incremental cost per unit = Direct material + Direct labor + Variable overhead + Variable selling cost
= $ 20 + $ 10 + $ 20 + $ 10 = $ 60
Hence option “a. $ 60” is correct answer.
Add Answer to:
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