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18 February, 02:05

The company has been approached by a customer with a request for a 100-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

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  1. 18 February, 02:33
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    The company should fix the price per unit as $9 to increase current profits.

    Explanation:

    Given:

    Sales price = $34

    Direct materials = $2

    Direct labor = $3

    Variable overhead = $4

    Fixed overhead = $5

    The company is capable of producing 5000 units with 80% operating capacity.

    5000/0.80-5000=1250 units

    Incremental cost = $2+$3+$4

    = $9
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