Geneva Company manufactures dolls that are sold to various customers. The company works at full capacity for half the year to meet peak demand, and operates at 80% capacity for the other half of the year. The following information is provided:Units produced and sold 600,000 unitsSelling price$35/unitVariable manufacturing costs$20/unitFixed manufacturing costs$1,200,000/yr.Variable selling and administrative costs$6/unitFixed selling and administrative costs$950,000/yr.Geneva receives a purchase order to make 5,000 dolls as a one-time event. The good news is that this order is during a period when Geneva does have sufficient excess capacity. What is the lowest selling price Geneva should accept for this purchase order?
A. $26.00
B. $35.00
C. $23.50
D. $29.50
E. $25.00
Answer: A
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