The following information relates to a product produced by Creamer Company: Fixed selling costs are £500,000 per year, and variable selling costs are £12 per unit sold. Although production capacity is 600,000 units per year, the company expects to produce only 400,000 units next year. The product normally sells for £120 each. A customer has offered to buy 60,000 units for £90 each.
The incremental cost per unit associated with the special order is

A) £84.
B) £81.
C) £69.
D) £64.

Question

The following information relates to a product produced by Creamer Company: Fixed selling costs are £500,000 per year, and variable selling costs are £12 per unit sold. Although production capacity is 600,000 units per year, the company expects to produce only 400,000 units next year. The product normally sells for £120 each. A customer has offered to buy 60,000 units for £90 each.
The incremental cost per unit associated with the special order is

A) £84. 
B) £81. 
C) £69. 
D) £64.

Quizplus · Accepted Answer

The Answer of The following information relates to a product produced by Creamer Company: Fixed selling costs are £500,000 per year, and variable selling costs are £12 per unit sold. Although production capacity is 600,000 units per year, the company expects to produce only 400,000 units next year. The product normally sells for £120 each. A customer has offered to buy 60,000 units for £90 each.
The incremental cost per unit associated with the special order is

A) £84. 
B) £81. 
C) £69. 
D) £64.

The Following Information Relates to a Product Produced by Creamer