Question

The traceable fixed administrative cost was incurred at the Alabama plant; in contrast, the allocated administrative cost represents a "fair share" of Deltones' corporate overhead. Alabama has been presented with a special order of 5,000 units of item no. 89 on which no selling cost will be incurred. The proper relevant cost in deciding whether to accept this special order would be:

Answer 1

40

Step-by-step explanation:

The computation of the relevant cost while accepting the special order is shown below:

= Fixed manufacturing + Variable selling + Fixed selling + Traceable fixed administrative + Allocated administrative

= 15 + 8 + 11 + 4 + 2

= 40

We simply added the all the cost which are shown above so that the relevant cost per unit could come