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Mikaelabelle Products sells pr oduct A at a selling price of $40 per unit. Mikaelabelles...

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Accounting

Mikaelabelle Products sells pr

oduct A at a selling price of $40 per unit.

Mikaelabelles cost per unit based on the full capacity of 500,000 units is as follows:

Direct materials $ 6

Direct labor 3

Indirect manufacturing (60% of which is fixed)

10

$19

A one-time-only special order offering to

buy 50,000 units was received from an overseas

distributor. The only other cost

s that would be incurred on th

is order would be $4 per unit

for shipping. Mikaelabelle has sufficient ex

isting capacity to manufacture the additional

units. In negotiating a price for the special or

der, Mikaelabelle shoul

d consider that the

minimum selling price per unit should be

a. $17.

b. $19

c. $21.

d. $23.

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