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Three (6 Marks) AH manufactures industrial components. One of its products, which is used in the construction of industrial air conditioners, is known as T33.
Three (6 Marks) AH manufactures industrial components. One of its products, which is used in the construction of industrial air conditioners, is known as T33. The cost of producing and selling a single unit of this product at the company's normal activity level of 8,000 units per month is as follows: Selling price. Direct materials. Direct labor. Variable manufacturing overhead Fixed manufacturing overhead. Variable selling expense..... Fixed selling and administrative expense. Per Unit Data $100 $26 $3 $1 $17 $2 $18 An order has been received from an overseas customer for 500 units of component T33 at price $50 per unit. There would be no variable selling expense on this special order and the total fixed manufacturing overhead and fixed selling and administrative expenses of the company would not be affected by the order. 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 200 units for regular customers. Required: 1. Should AH company accept the offer? 2. What is the minimum price per unit on the special order below which the company should not go
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