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Kansas Company Produces and Sells 20,000 Units at $22 Per

Question 121

Multiple Choice

Kansas Company produces and sells 20,000 units at $22 per unit.Kansas Company's product cost is calculated as follows: Kansas Company produces and sells 20,000 units at $22 per unit.Kansas Company's product cost is calculated as follows: A total of 500 setups at a cost of $120 per setup are required to produce the 20,000 units.Kansas Company has received a special order to sell 5,000 units at $12 per unit.Kansas Company has excess capacity available,but these 5,000 units would require 60 setups.If Kansas Company accepts the special order,what is the increase in costs to them? A) $7,200 B) $40,000 C) $57,200 D) $65,000 A total of 500 setups at a cost of $120 per setup are required to produce the 20,000 units.Kansas Company has received a special order to sell 5,000 units at $12 per unit.Kansas Company has excess capacity available,but these 5,000 units would require 60 setups.If Kansas Company accepts the special order,what is the increase in costs to them?


A) $7,200
B) $40,000
C) $57,200
D) $65,000

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