Wolff Ltd. sells product P at a price of $38 a unit. The per-unit cost data are: direct materials $8, direct labor $10, and overhead $12 (25% fixed and 75% variable). Wolff has sufficient capacity to accept a special order for 40,000 units just received. Selling costs associated with this order would be $3 per unit. The minimum selling price per unit should be
A) $24
B) $30
C) $32
D) $36

Question

Quizplus · Accepted Answer

The minimum selling price should cover variable costs and selling costs. Variable costs per unit are direct materials ($8) + direct labor ($10) + variable overhead ($9, which is 75% of $12) + selling costs ($3), totaling $30.

Wolff Ltd Sells Product P at a Price of $38 a a Unit