Oak Creek Company Uses Activity-Based Costing,and Normally Produces 1,000,000 Units

Multiple Choice

Oak Creek Company uses activity-based costing,and normally produces 1,000,000 units per month.At this level of production,the costs per unit are as follows:
$\begin{array} { l } \text {Direct materials used }&\$15 \\ \text {Direct labor }&\$6 \\ \text { Variable indirect production}&\$ 1\\ \text {Setup costs }&\$5 \\\end{array}$

For 1,000,000 units,500 setups are required at a cost of $10,000 per setup.The company has received a special order for 100,000 units at $22 per unit.The company has excess capacity.The company estimates that 5 setups will be required for the special order.Variable selling costs of $1 per unit will also be incurred for the special order.What is the cost of the special order?

A) $2,300,000
B) $2,350,000
C) $2,700,000
D) $2,800,000