Suppose the company is already operating at capacity when the special order is received from the overseas customer. What would be the opportunity cost of each unit delivered to the overseas customer?

A) $9.70.
B) $7.20.
C) $8.40.
D) $32.50.

The opportunity cost of each unit delivered to the overseas customer includes the contribution margin that would be foregone by not selling the unit at the normal price. Since the company is operating at capacity, producing a unit for the overseas customer means not producing a unit for the regular market. The contribution margin per unit at the normal selling price is calculated as the selling price minus variable costs (direct materials, direct labor, variable manufacturing overhead, and variable selling & administrative expense). The fixed costs are not considered in the calculation of opportunity cost for this decision, as they do not change with the decision to accept or reject the special order.Normal selling price = $86.10Total variable costs per unit = Direct materials ($42.60) + Direct labor ($8.10) + Variable manufacturing overhead ($1.10) + Variable selling & administrative expense ($1.80) = $53.60Contribution margin per unit = Normal selling price - Total variable costs per unit = $86.10 - $53.60 = $32.50Therefore, the opportunity cost of each unit delivered to the overseas customer is $32.50, as this is the contribution margin that would be foregone by not selling the unit at the normal price.