Maxim Company Produces a Designer Wall Clock Which Has a Unit

Multiple Choice

Maxim Company produces a designer wall clock which has a unit variable cost of $15 and a unit fixed cost of $9. The company currently sells its products to customers at a unit selling price of $50. A regional company has offered to purchase 500 of Maxim's clocks at a unit selling price of $24 but would like to have the clocks customized with its company logo. The customization will cost an additional $5 per clock. Due to the current economic situation, Maxim has sufficient excess capacity to produce and sell the special-order units without incurring additional fixed costs. Should this Maxim accept or reject this special order and why?

A) Reject because the special-order price is less than the normal unit selling price.
B) Reject because the special-order price is the same as the total unit cost to produce.
C) Reject because the total per unit cost to produce the special-order exceeds the special-order unit selling price.
D) Accept because the differential revenue exceeds the differential costs.