The following information relates to a product produced by Malkovich Company: $$\begin{array} { l r }
\text { Direct materials } & \$ 24 \
\text { Direct labor } & 15 \
\text { Variable overhead } & 30 \
\text { Fixed overhead } & \underline { 18 } \
\text { Unit cost } & \$ 87
\end{array}$$ 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)$64.
B)$69.
C)$81.
D)$84.

Question

The following information relates to a product produced by Malkovich Company: $$\begin{array} { l r } 
\text { Direct materials } & \$ 24 \
\text { Direct labor } & 15 \
\text { Variable overhead } & 30 \
\text { Fixed overhead } & \underline { 18 } \
\text { Unit cost } & \$ 87
\end{array}$$ 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)$64.
B)$69.
C)$81.
D)$84.

Quizplus · Accepted Answer

The Answer of The following information relates to a product produced by Malkovich Company: $$\begin{array} { l r } 
\text { Direct materials } & \$ 24 \
\text { Direct labor } & 15 \
\text { Variable overhead } & 30 \
\text { Fixed overhead } & \underline { 18 } \
\text { Unit cost } & \$ 87
\end{array}$$ 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)$64.
B)$69.
C)$81.
D)$84.

The Following Information Relates to a Product Produced by Malkovich