Question
Wonder Company sells Product A for $21 per unit. Wonder's unit product cost based on the full capacity of 200,000 units is as follows: Direct
Wonder Company sells Product A for $21 per unit. Wonder's unit product cost based on the full capacity of 200,000 units is as follows:
Direct Materials
$4
Direct Labour
$5
Manufacturing Overhead
$6
Unit Product Cost
$15
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?
A.$14.
B.$15.
C.$16.
D.$18.
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