McConnell is a manufacturer of industrial components.
McConnell is a manufacturer of industrial components. One of its products that is used as a subcomponent in auto
manufacturing is JC-46. This product has the following financial structure per unit.
| Selling price | $150 |
| Direct materials | 20 |
| Direct labor | 15 |
| Variable manufacturing overhead | 12 |
| Fixed manufacturing overhead | 30 |
| Shipping and handling | 3 |
| Fixed selling and administrative | 10 |
| Total costs | $ 90 |
McConnell has received a special, one-time order for 1,000 JC-46 parts. Assume that McConnell is operating at full capacity, and that the contribution of the output would be displaced by the special order is $10,000. The minimum price that is acceptable for this one-time special order must be greater than
a) $60.
b) $70.
c) $87.
d) $100.
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