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Delta Company produces a single product. The cost of producing and selling a single unit of this product at the company's normal activity level of
Delta Company produces a single product. The cost of producing and selling a single unit of this product at the company's normal
activity level of units per year is:
The normal selling price is $ per unit. The company's capacity is units per year. An order has been received from a mail
order house for units at a special price of $ per unit. This order would not affect regular sales or total fixed costs.
Required:
What is the financial advantage disadvantage of accepting the special order?
As a separate matter from the special order, assume the company's inventory includes units that are inferior quality. The units
must be sold through regular channels at a reduced price. The company does not expect the selling of these inferior units to affect
regular sales. What unit cost is relevant for establishing a minimum selling price for the inferior units?
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What is the financial advantage disadvantage of accepting the special order?
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