Assuming there is adequate manufacturing capacity and ail other variables are constant , what is the relevant cost per unit to consider when deciding whether to accept this special order at the reduced price?

A company produces water buckets with the following costs per bucket:

Direct labor = 82

Direct material = $5

Fixed manufacturing = 83.50

Variable manufacturing = 82.50

The water buckets are usually sold for $15. However, the company received a special order for 50.000 water buckets at 311 each.

Assuming there is adequate manufacturing capacity and ail other variables are constant , what is the relevant cost per unit to consider when deciding whether to accept this special order at the reduced price?
A . $9.50
B . $10.50
C . $11
D . $13

View Answer

Answer: A