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