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The Immanuel Company has just obtained a request for a special order of 6,000 jigs to be shipped at the end of the month at

The Immanuel Company has just obtained a request for a special order of 6,000 jigs to be shipped at the end of the month at a selling price of $7 each. The company has a production capacity of 90,000 jigs per month with total fixed production costs of $144,000. At present, the company is selling 80,000 jigs per month through regular channels at a selling price of $11 each. For these regular sales, the cost for one jig is:

Variable production cost

$4.60

Fixed production cost

$1.80

Variable selling expense

$1.00

If the special order is accepted, Immanuel will not incur any selling expense; however, it will incur shipping costs of $0.30 per unit. Total fixed production cost would not be affected by this order. At what selling price per unit should Immanuel be indifferent between accepting or rejecting the special offer?

A: $7.40

B: $7.70

C: $6.40

D: $4.90

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