Blanche Corporation currently produces and sells 24,000 soccer balls per month at a price $22. All sales are made in the soccer balls per month.
A European retail store has recently contacted blanche Corporation and offered to buy 1,500 soccer balls at $12 each. If the offer is accepted, the sale is not expected to have any effect on the current level of sales or the current selling price in the United States.
The accounting department has provided the cost data per soccer ball.
Direct materials....................................$2.50
Direct labor..........................................3.50
Variable factory overhead.........................3.50
Shipping.............................................0.75
Packaging............................................2.00
Selling commission.................................1.25
Fixed factory overhead............................2.25
Total cost.........................................$15.75
Blanche Corporation has excess manufacturing capacity to produce the components without incurring additional fixed factory overhead. Since the European retailer has approached
Blanche Corporation about the sale, no selling commission will be paid on this sale. What per-unit manufacturing cost should be used in determining whether Coname Corporation should accept the special order?
Choose from the following
A. $15.75
B. $12.25
C. $14.50
D. 8.75