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Question - 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 items is relevant to the special order?
a. Normal selling price of $11.50
b. $7.35 spent on donuts and coffee
c. Fixed factory overhead per unit of $1.20
d. Selling price per unit of special order of $8.90
e. None of these items are correct.
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