Southern Digital,Inc. The Southern Digital,Inc.produces a High-Quality Computer Chip.Unit Production Costs (Based

Southern Digital,Inc.
The Southern Digital,Inc.produces a high-quality computer chip.Unit production costs (based on capacity production of 100,000 units per year) follow:
Direct material                               $50
Directlabor                                      20
Overhead(20% variable)                 10
Other information:
Sales price                                      100
SG\&A costs(40% variable)             15

Refer to Southern Digital,Inc.Assume,for this question only,that the Memory Division is operating at a level of 70,000 chips per year.What is the minimum price that the division would consider on a "special order" of 1,000 chips to be distributed through normal channels?

A) $78
B) $95
C) $100
D) $81

Correct Answer:

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