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Lambda company produces a single product. the cost of producing and selling a single unit...

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Accounting

Lambda company produces a single product. the cost of producing and selling a single unit of this product at the company's normal activity level of 60,000 units per year is as follows:

Direct Materials $6.10
Direct Labour 3.80
Variable manufacturing overhead 2.00
Fixed manufacturing overhead 4.20
Variable selling and admin expenses 2.50
Fixed selling and admin expenses 2.40

The normal selling price is $25 per unit. The company's capacity is 75,000 units per year. An order has been received from a mail-order house for 16,000 units. If Lambda accepts this special order what is the lost contribution of regular sales that would be forfeited?

A $8,900

B none of these

C $10,600

D $4,000

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