Terry 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 50,000 units per month is as follows Direct materials $32 5 Direct labor $7 20 Variable manufacturing overhead $1 30 Fixed manufacturing overhead $20 90 Variable selling administrative expense $1 90 Fixed selling administrative expens $7 30 The normal selling price of the product is $75 00 per unit An order has been received from an overseas customer for 3,000 units to be delivered this month at a special discounted price This order would have no effect on the company's normal sales and would not change the total amount of the company's fixed costs The variable selling and administrative expense would be $0 30 less per unit on this order than on normal sales Direct labor is a variable cost in this company Required Show all your calculations to receive full points via email Suppose there is capacity to produce the units required by the overseas customer and the special discounted price on the special order is $65 60 per unit What is the financial advantage (disadvantage) for the company next month if it accepts the special order Suppose the company is already operating at capacity when the special order is received from the overseas customer What would be the opportunity cost of each unit delivered to the overseas customer Suppose there is not enough idle capacity to produce all of the units for the overseas customer and accepting the special order would require cutting back on production of 1,000 units for regular customers What would be the minimum acceptable price per unit for the special order All the data for regular unit remains unchanged Assume that the company now has 500 units left over from last year However, they are chartreuse (a bright yellow green) and have not sold at regular prices If these units must be sold through regular channels but at a reduced price, what cost is relevant for establishing the minimum selling price for these units

Question

Terry 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 50,000 units per month is as follows  Direct materials $32 5 Direct labor $7 20 Variable manufacturing overhead $1 30 Fixed manufacturing overhead $20 90 Variable selling   administrative expense $1 90 Fixed selling   administrative expens $7 30 The normal selling price of the product is $75 00 per unit  An order has been received from an overseas customer for 3,000 units to be delivered this month at a special discounted price  This order would have no effect on the company's normal sales and would not change the total amount of the company's fixed costs  The variable selling and administrative expense would be $0 30 less per unit on this order than on normal sales  Direct labor is a variable cost in this company  Required   Show all your calculations to receive full points   via email  Suppose there is capacity to produce the units required by the overseas customer and the special discounted price on the special order is $65 60 per unit  What is the financial advantage (disadvantage) for the company next month if it accepts the special order  Suppose the company is already operating at capacity when the special order is received from the overseas customer  What would be the opportunity cost of each unit delivered to the overseas customer  Suppose there is not enough idle capacity to produce all of the units for the overseas customer and accepting the special order would require cutting back on production of 1,000 units for regular customers  What would be the minimum acceptable price per unit for the special order  All the data for regular unit remains unchanged  Assume that the company now has 500 units left over from last year  However, they are chartreuse (a bright yellow green) and have not sold at regular prices  If these units must be sold through regular channels but at a reduced price, what cost is relevant for establishing the minimum selling price for these units

Accepted Answer

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Direct materials	$32.5
Direct labor	$7.20
Variable manufacturing overhead	$1.30
Fixed manufacturing overhead	$20.90
Variable selling & administrative expense	$1.90
Fixed selling & administrative expens	$7.30

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Terry 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

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