A company is currently operating at 75% capacity and producing 3,000 units. Current cost information relating to this production is shown in the table below: The company has been approached by a customer with a request for a 200-unit special order. What is the minimum per unit sales price that management would accept for this order if the company wishes to increase current profits?
A) Any amount over $43 per unit.
B) Any amount over $17 per unit.
C) Any amount over $21 per unit.
D) Any amount over $13 per unit.
E) Any amount over $22 per unit.

Question

A company is currently operating at 75% capacity and producing 3,000 units. Current cost information relating to this production is shown in the table below:  The company has been approached by a customer with a request for a 200-unit special order. What is the minimum per unit sales price that management would accept for this order if the company wishes to increase current profits?
A) Any amount over $43 per unit. 
B) Any amount over $17 per unit. 
C) Any amount over $21 per unit. 
D) Any amount over $13 per unit. 
E) Any amount over $22 per unit.

Quizplus · Accepted Answer

3,000/0.75 − 3,000 = 1,000 unit capacity remaining
$7 + $6 + $4 = $17 incremental costs

A Company Is Currently Operating at 75% Capacity and Producing