Question

Q 8.82: A company produces a backpack that has a built-in solar-powered charger for small electrical appliances. They sell for $250 each. Other information about the product: Per Unit Total Variable manufacturing cost $150.00 Fixed manufacturing cost $200,000 Variable selling and admin expenses $15.00 Fixed selling and admin expenses $125,000 The company usually produces and sells 5,000 units each year. Last year, however, after a very cold and wet summer, they had 750 units left in inventory. The sports club at the local university offered them $175 each if the company would sell them all the remaining units. What would you expect the operations manager to do? A The manager would decline the offer because the deferred fixed manufacturing costs in ending inventory under absorption costing would increase net income. B The manager would decline the offer because the absorption manufacturing cost per unit is more than the price that was offered. C The manager would decline the offer because the variable manufacturing cost per unit is more than the price that was offered. D The manager would accept the offer because the absorption manufacturing cost per unit is less than the price that was offered.