ING2410-001 Connect https//newonectmheducation.com/flow/connect htm ter 12 Homew

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ING2410-001 Connect https//newonectmheducation.com/flow/connect htm ter 12 Homework 6 Delta Compary produces a single product. The cost of producing and selling a single unit olf this product at the compary's normel ectivity level of 97 200 units per year is 2.20 53.00 0.70 4.35 Direct naterials Verieble manufacturing overhead Fixed sanufacturing overhead Variable selling and administrative expenses $1. Fixed sellire and adeinistrative expenses 2. The normal seling price is $20 00 per unit. The company's capacity is 130.800 snits per year. An order has been neceived trom a mail arder house for 2.800 units at a special pice of $1700 per unit. This order wouid not affect reguiar sales or the company's total fised Costs Required: 1 what is the fnancial advantage Idsedventage) of accepting the special order 2 As s seperane matter from the special order, assume the company's inventory includes t00d units of this product that wee produced ast year and than are unit cos is relevant for estabishing a minimum selling price for these units inferior to the cument model The units mst be soid through reguiar cnannels at reduced prices what lete thi. 9w tion by "tense your anwer. m the tabs below. from the special ordersume the company's inventory includes 1,000 units of thie product that were What unit cost is alevant or wtablishing misimum selling for these units? nyour annwer to 2 up

Explanation / Answer

Since the manufacturing cost of 1000 units is a sunk cost (past cost ) ,that is already incurred , it is irrelevant in decision making

This unit is to be sold through regular channels thus only relevant cost is a variable selling and administrative cost (incremental cost) that will be incurred to sell this units .

**fixed variable and administrative cost is irrelevant as it will be incurred whether this units are sold or not

Relevant cost per unit = $1.60 per unit

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