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QUESTION 5 Jason Ltd receives a one-time order that is not considered part of its normal ongoing business. Jason Ltd makes a single product with
QUESTION 5 Jason Ltd receives a one-time order that is not considered part of its normal ongoing business. Jason Ltd makes a single product with a unit variable manufacturing cost of $8. This is made up of direct material $4, direct manufacturing labour $2, and variable MOH allocated $2 per unit. Variable marketing cost for the product is $4 per unit. Normal selling price is $25 per unit. Annual capacity is 10,000 units, and actual annual fixed costs total $58,000. This is made up of $38,000 fixed manufacturing overhead and $20,000 fixed marketing cost. Jason Ltd is currently producing and selling 7,000 units. A foreign distributor offers to purchase 3,000 units. On financial considerations alone, what is the minimum price at which Jason Ltd. would be willing to accept the special order? a. S8 b.510 OC. $12 d. $15 e. $17
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