Wagner Company sells Product A for $$28$ per unit. Wagner's unit product cost based on the full capacity of $200,000$ units is as follows:

Direct Materials

$$7$

Direct Labour

$$5$

Manufacturing Overhead

$$9$

Unit Product Cost

$$21$

A special order offering to buy $20,000$ units has been received from a foreign distributor. The only selling costs that would be incurred on this order would be $$4$ per unit for shipping. Wagner has sufficient idle capacity to manufacture the additional units. Two$-$thirds of the manufacturing overhead is fixed and would not be affected by this order. Assume that direct labour is an avoidable cost in this decision. In negotiating a price for the special order, what should be the minimum acceptable selling price per unit?

Question $16$Answer

a$.$

$$19$

b$.$

$$21$

c$.$

$$28$

d$.$

$$12$