A Company Is Considering a Special Order for 1,000 Units

Multiple Choice

A company is considering a special order for 1,000 units to be priced at $8.90 (the normal price would be $11.50) .The order would require specialized materials costing $4.00 per unit.Direct labor and variable factory overhead would cost $2.15 per unit.Fixed factory overhead is $1.20 per unit.However, the company has excess capacity and acceptance of the order would not raise total fixed factory overhead.The warehouse, however, would have to add capacity costing $1,300.Which of the following is relevant to the special order?

A) $11.50 normal selling price
B) $1.20 fixed factory overhead per unit
C) $7.35 spent on donuts and coffee
D) $8.90 selling price per unit of special order
E) None of these.