Franklin Company uses activity-based costing, and normally produces 1,000,000 units per month. At this level of production, the costs per unit are as follows: Direct materials used $14 Direct labor $6...

Franklin Company uses activity-based costing, and normally produces 1,000,000 units per month. At this level of production, the costs per unit are as follows:

Direct materials used                      $14

Direct labor                                      $6

Variable indirect production             $1

Setup costs                                      $3

For 1,000,000 units, 500 setups are required at a cost of $6,000 per setup. The company has received a special order for 100,000 units at $22 per unit. The company has excess capacity. The company estimates that 5 setups will be required for the special order. What is the cost of the special order?

1. A) $2,100,000


2. B) $2,130,000


3. C) $2,400,000


4. D) $2, 430,000