Suppose there is not enough idle capacity to produce all of the units for the overseas customer and accepting the special order would require cutting back on production of 700 units for regular customers.The minimum acceptable price per unit for the special order is closest to:
A) $63.78.
B) $69.10.
C) $78.90.
D) $86.10.

Question

Quizplus · Accepted Answer

The minimum acceptable price per unit for the special order is closest to $63.78. This is because the company would need to cut back on production of 700 units for regular customers in order to accept the special order. The company would lose $63.78 per unit on these 700 units, so the minimum acceptable price per unit for the special order is $63.78.

Suppose There Is Not Enough Idle Capacity to Produce All