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Venlite, Inc. produces and sells cosmetic products. Currently, the company is operating at 70% of its capacity. The sales price of its product is $30
Venlite, Inc. produces and sells cosmetic products. Currently, the company is operating at 70% of its capacity. The sales price of its product is $30 per unit, and it incurs a full cost of $25 to produce each unit. Its yearly fixed manufacturing overhead amounts to $20,000. The company has received a one-time order for supplying 5,000 units at $26 per unit. This order can be executed within the excess production capacity and will not involve any additional costs. To make this decision, the management of Venlite should use Select one: A. absorption costing as the decision is short-term in nature O B. variable costing as the decision is short-term in nature C. absorption costing as the decision is long-term in nature D. variable costing as the decision is long-term in nature O O E. None of the above. Paradiso Company manufactures dolls that are sold to various distributors. The company produces at full capacity for six months each year to meet peak demand; the manufacturing facility operates at 80% of capacity for the other six months of the year. The company has provided the following data for the year. No. of units produced and sold 400,000 units Sales price $40 per unit Variable manufacturing costs $15 per unit Fixed manufacturing costs $1,000,000 per year Variable selling and administrative costs $8 per unit Fixed selling and administrative costs $500,000 per year Paradiso receives an offer to produce 6,000 dolls for a special event. This is a one-time opportunity during a period when the company has excess capacity. What is the minimum sales price the company should accept for the order? Select one: O A. $40 O B. $25 O C. $15 D. $20 E. None of the above
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