The Following Information Relates to a Product Produced by Malkovich

The following information relates to a product produced by Malkovich Company: $$\begin{array} { l r } \text { Direct materials } & \$ 24 \\\text { Direct labor } & 15 \\\text { Variable overhead } & 30 \\\text { Fixed overhead } & \underline { 18 } \\\text { Unit cost } & \$ 87\end{array}$$ Fixed selling costs are $500,000 per year, and variable selling costs are $12 per unit sold. Although production capacity is 600,000 units per year, the company expects to produce only 400,000 units next year. The product normally sells for $120 each. A customer has offered to buy 60,000 units for $90 each.
The incremental cost per unit associated with the special order is

A) $64.
B) $69.
C) $81.
D) $84.

Correct Answer:

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