Question

The following information relates to a product produced by Marigold Company: Direct materials $20 Direct labor 10 Variable overhead 20 Fixed overhead 15 Unit cost $65 Fixed selling costs are $650,000 per year, and variable selling costs are $10 per unit sold. Although production capacity is 400,000 units per year, the company expects to produce only 250,000 units next year. The product normally sells for $100 each. A customer has offered to buy 40,000 units for $80 each. The incremental cost per unit associated with the special order is:

Answer 1

The incremental cost per unit associated with the special order is $60.

Step-by-step explanation:

Direct materials 20

Direct labor 10

Variable overhead 20

Variable selling and administrative 10

Total 60

Therefore, The incremental cost per unit associated with the special order is $60.