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Questions 8-10 are based on the following revenue and cost structure: Selling price per unit: Variable cost per unit: S 100 S 40 $12,000 40% Total fixed costs: ax rate on operating income:
CPA Adapted] Theta Company sells product A at a selling price of S40 per unit. Thetas cost per unit based on the full capacity of 500,000 units is as follows: S 6 Direct materials Direct labour Indirect manufacturing (60% of which is fixed) 10 S19 A one-time-only special order offering to buy 50,000 units was received from an overseas distributor. The only other costs that would be incurred on this order would be S4 per unit for shipping. Theta has sufficient existing capacity to manufacture the additional units. In negotiating a price for the special order, Theta should consider that the minimum selling price per unit should be a. $17. b.S1 c. $21 d. $23.
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Answer #1

Option AAcceptance of special Order of 50000 Units Particulars Direct materials Direct Labour Indirect Manufacturing Variable is ( $10-40%) Additional Shipping Cost Minimum Selling price Amount |$ 4 4. $17 Here,in this Case Company wont incurr any Extra Fixed Cost for Producing 50000 units The Minimum Selling Price is $ 17 which Included Extra Shipping Cost

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