The Production Department of Ollie Corp

Multiple Choice

The Production Department of Ollie Corp. has produced and sold 27,840 yards of fabric to local craft stores. The Sewing Department of Ollie Corp. would like to manufacture 12,300 scarves and needs fabric. Each scarf will require 1 yard of fabric and the Sewing Department has asked the Production Department for a quote. The Production Department's Sales were $35,360, with Variable Costs of $11,300, Fixed Costs of $16,540, and production capacity of 60,000 yards of fabric. The negotiated sales price from the Production Department is the absorption cost. What should the sales price per unit for the Sewing Department be if they would like to have an Operating Income of $4,940?

A) $0.81 per yard
B) $1.00 per yard
C) $1.40 per yard
D) $1.41 per yard