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The Mothers of Invention Company manufactures and sells one product. The company normally produces and sells at a level of 180,000 prids. At this level,
The Mothers of Invention Company manufactures and sells one product. The company normally produces and sells at a level of 180,000 prids. At this level, the company has the following costs: Direct materials per unit $4.50 Variable overhead per unit $4.00 Fixed overhead per unit $5 ($900,000 total) Direct labor per unit $8.00 $3.00 Fixed selling expense Variable selling expense per unit $2 ($360,000 total) The company has the physical capacity to produce 200,000 units, if needed. The normal selling price is $40 per unit. A customer in a foreign market wants to make a one-time-only purchase of 15,000 units. Filling this order would not affect our normal sales. Import tariffs on these units would be $1.50 per unit, and licenses and permits would cost a total of $18,000 for this order. The only variable selling expenses would be shipping costs of $.90 per unit. The overseas customer is only willing to pay $25 per unit. If the Mothers of Invention Company accepts the order, how much will the company be better off or worse off PER UNIT? $6.10 better off per unit $4.90 better off per unit None of these answers are correct. $2.90 better off per unit $.10 worse off per unit
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