COST ACCOUNTING
INFORMATION FOR DECISION MAKING
Question
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Mikaelabelle Products sells product A at a selling price of $40 per unit. Mikaelabelle’s cost per unit based on the full capacity of 500, 000 units is as follows:Direct materials $ 6Direct labor $3Indirect manufacturing (60% of which is fixed) $10A one-time-only special order offering to buy 50, 000 units was received from an overseas distributor. The only other costs that would be incurred on this order would be $4 per unit for shipping. Mikaelabelle has sufficient existing capacity to manufacture the additional units. In negotiating a price for the special order, Mikaelabelle should consider that the minimum selling price per unit should be
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$17
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$19
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$21
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$23
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Explanation:
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