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