Pamela in Bamplona Makes Bull-Repellent Scent According to a Traditional

Multiple Choice

Pamela in Bamplona makes bull-repellent scent according to a traditional Spanish recipe,which normally sells at €9 (Euros) per unit.Normal production volume is 10,000 ounces per month.Average cost is €5 per ounce,of which €2 is direct material and €1 is variable conversion cost.This product is seasonal.After July,demand for this product drops to 6,000 ounces monthly.In November,Umberto offers to buy 1,800 ounces for €8,100. If Pamela accepts the order,she must design a special label for Umberto at a cost of €800.Each label will cost 30 cents to make and apply.Pamela should:

A) accept the order,at a gain of €625
B) reject the order,at a loss of €1,875
C) reject the order,at a loss of €2,375
D) accept the order,at a gain of €1,360
E) reject the order,the new selling price is less than the average cost per ounce