Multiple Choice Question

Alpha Inc. produces a product that currently sells for $$110$ per unit. Current production costs per unit include direct materials of $$30,$ direct labor of $$25,$ variable overhead of $$15,$ fixed overhead of $$20,$ and total production costs of $$90.$ Alpha Inc, has received a special pricing offer from a nonprofit organization to buy $5,000$ units at $$60$ per unit. Alpha Inc. currently has idle production capacity. Based on the scenario, Alpha Inc. should

not accept the special offer because the contribution margin from the offer is $($$$110)$

accept the special offer because the contribution margin from the offer is $$10$

not accept the special offer because the contribution margin from the offer is $($$$10)$

accept the special offer because the contribution margin from the offer is $$80$