A company is currently operating at 60% capacity producing 10,000 units. Cost information relating to this current production is shown in the following table:
$$\begin{array} { | l | r | }
\hline & \text { Per Unit } \
\hline \text { Sales price } & \$ 21.00 \
\hline \text { Direct material } & \$ 6.00 \
\hline \text { Direct labor } & \$ 4.12 \
\hline \text { Variable overhead } & \$ 2.23 \
\hline \text { Fixed overhead } & \$ 0.80 \
\hline
\end{array}$$ The company has been approached by a customer with a request for a special order for 5,000 units. What is the minimum per unit sales price that management would accept for this order if the company wishes to increase current profits?

Question

A company is currently operating at 60% capacity producing 10,000 units. Cost information relating to this current production is shown in the following table:
 $$\begin{array} { | l | r | } 
\hline & \text { Per Unit } \
\hline \text { Sales price } & \$ 21.00 \
\hline \text { Direct material } & \$ 6.00 \
\hline \text { Direct labor } & \$ 4.12 \
\hline \text { Variable overhead } & \$ 2.23 \
\hline \text { Fixed overhead } & \$ 0.80 \
\hline
\end{array}$$ The company has been approached by a customer with a request for a special order for 5,000 units. What is the minimum per unit sales price that management would accept for this order if the company wishes to increase current profits?

Quizplus · Accepted Answer

The Answer of A company is currently operating at 60% capacity producing 10,000 units. Cost information relating to this current production is shown in the following table:
 $$\begin{array} { | l | r | } 
\hline & \text { Per Unit } \
\hline \text { Sales price } & \$ 21.00 \
\hline \text { Direct material } & \$ 6.00 \
\hline \text { Direct labor } & \$ 4.12 \
\hline \text { Variable overhead } & \$ 2.23 \
\hline \text { Fixed overhead } & \$ 0.80 \
\hline
\end{array}$$ The company has been approached by a customer with a request for a special order for 5,000 units. What is the minimum per unit sales price that management would accept for this order if the company wishes to increase current profits?

A Company Is Currently Operating at 60% Capacity Producing 10,000