Reference no: EM132474320

JCN Industries normally produces and sells 5,000 keyboards for personal computers each month. Variable manufacturing costs amount to $25 per unit, and fixed costs are $146,000 per month. The regular sales price of the keyboards is $86 per unit. JCN has been approached by a foreign company that wants to purchase an additional 1,000 keyboards per month at a reduced price. Filling this special order would not affect JCN 's regular sales volume or fixed manufacturing costs.

Question 1: On the basis of the above information only, which of the following is not true?

Multiple Choice

Option 1: At the 6,000-unit level of production, JCN's average cost per unit is $49.33.

Option 2: The fixed manufacturing costs of $146,000 are not relevant to this decision regarding the special order.

Option 3: At the 5,000-unit level of production, JCN's average cost per unit is $54.20.

Option 4: It would not be profitable for JCN to consider the special order at a price less than $49 per unit.