Acompany is considering a special order for 1,000 units to be priced at $8.90 (the normal price would be $11.50). the order would require specialized materials costing $4.00 per unit. direct labor and variable factory overhead would cost $2.15 per unit. fixed factory overhead is $1.20 per unit. however, the company has excess capacity and acceptance of the order would not raise total fixed factory overhead. the warehouse, however, would have to add capacity costing $1,300. which of the following is relevant to the special order?
a.$8.90 selling price per unit of special order
b.$1.20 fixed factory overhead per unit
c.$11.50 normal selling price
d.$7.35 spent on donuts and coffee
e. none of these choices are correct.

What is relevant?

The selling price. The rest of the options will not affect the decision. With that selling price, the offer is profitable, therefore convenient.

Explanation:

Giving the following information:

A company is considering a special order for 1,000 units to be priced at $8.90 (the normal price would be $11.50). The order would require specialized materials costing $4.00 per unit. Direct labor and variable factory overhead would cost $2.15 per unit.

Unitary cost= 4 + 2.15 + 1,300/1000= 7.45

What is relevant?

The selling price. The rest of the options will not affect the decision. With that selling price, the offer is profitable, therefore convenient.

1. avoid them

2. a talk with them

3. ask someone you trust

4. ignore

5. call police

borrow money from the government then pay the government back 5k