Venlite, Inc produces and sells cosmetic products
Currently, the company is operating at 70% of its capacity. The sales price of its product is $30 per unit, and it incurs a full cost of $25 to produce each unit. Its yearly fixed manufacturing overhead amounts to $20,000. The company has received a one-time order for supplying 5,000 units at $26 per unit. This order can be executed within the excess production capacity and will not involve any additional costs. To make this decision, the management of Venlite should use ________.
A) absorption costing as the decision is long-term in nature
B) variable costing as the decision is short-term in nature
C) absorption costing as the decision is short-term in nature
D) variable costing as the decision is long-term in nature
B
You might also like to view...
According to Michael Porter, which of the following refers to a country's endowment of resources?
A) factor conditions B) dependent variables C) cultural dimensions D) value constructs
In this situation, the manager has set a price that is higher than the target market is willing to pay. The customer looks at this situation as a bad deal and, unless the company has a monopoly or some other kind of market power, does not buy
Identify the situation. A) perceived value > price > cost B) price > cost > perceived value C) price > perceived value > cost D) perceived value > cost > price