Question
Diamond Company expects to incur the following costs at the planned production level of 20,000 units: Direct materials $200,000 Direct labor 240,000 Variable overhead 160,000
Diamond Company expects to incur the following costs at the planned production level of 20,000 units:
| Direct materials | $200,000 |
| Direct labor | 240,000 |
| Variable overhead | 160,000 |
| Fixed overhead | 100,000 |
The selling price is $55 per unit. The company currently has an idle or excess capacity of 5,000 units. Suppose that Diamond Company has received a special order from a wholesaler, which has offered to buy 4,000 units at $50 each. What is the per unit relevant cost associated with this special order?
| A. | $30 | |
| B. | $42 | |
| C. | $47 | |
| D. | $55 |
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Management Accounting A Business Planning Approach
Authors: Noah P. Barsky, Jr. Anthony H. Catanach
2nd Edition
1516506286, 978-1516506286
