Minor Electric has received a special one-time order for 1,500 light fixtures (units) at $5 per unit. Minor currently produces and sells 7,500 units at $6.00 each. This level represents 75% of its capacity. Production costs for these units are $4.50 per unit, which includes $3.00 variable cost and $1.50 fixed cost. To produce the special order, a new machine needs to be purchased at a cost of $1,000 with a zero salvage value. Management expects no other changes in costs as a result of the additional production. If Minor wishes to earn $1,250 on the special order, the size of the order would need to be:
A. 4,500 units.
B. 300 units.
C. 1,125 units.
D. 2,250 units.
E. 625 units.
Answer: C
You might also like to view...
The source code field of each GL entry provides a beginning point of reference for developing a proper audit trail
Indicate whether the statement is true or false
An organization may well choose to maintain the status quo as a growth strategy when
a. it wishes to extend the market b. it wishes to diversify its offerings c. it wishes to penetrate the existing market d. it wishes to respond to a declining market e. it faces little or no competition
Value stream mapping (VSM) ______.
A. is typically done once an organization has converted to a lean system B. facilitates identifying sources and causes of waste C. has the potential to increase the carbon footprint D. is applied only in push production systems
A certified check is a personal check certified by a bank that the account contains adequate funds to cover the check
Indicate whether the statement is true or false.