Answer:
C. Pamela should reject the order, at a loss of € 2,375
Explanation:
The average cost of production is 5 euros per ounce. This implies that the production cost of 1500 ounces is: 1,500 * 5 = € 7,500. Apart from that, € 500 would have to be paid for the design of the labels and € 0.25 euros for making them and applying them (0.25 * 1,500 = 375 euros).
If we consider all these amounts we have:
Average cost of production: € 7,500
Cost of designing labels: € 500
Cost of making and applying labels: € 375
TOTAL COSTS = € 8,325
If Pamela decided to sell 1,500 ounces at € 6,000 she would lose: €8,325 -€6,000 = €2,325
Then, she shoud reject the offer.