A company is currently operating at 65% capacity producing 12,000 units.Cost information relating to this current production is shown in the following table:
$$\begin{array} { | l | r | }
\hline & \text { Per Unit } \
\hline \text { Sales price } & \$ 6 \
\hline \text { Direct material } & \$ 2.30 \
\hline \text { Direct labor } & \$ 0.87 \
\hline \begin{array} { l }
\text { Variable } \
\text { overhead }
\end{array} & \$ 0.91 \
\hline \text { Fixed overhead } & \$ 0.70 \
\hline
\end{array}$$
The company has been approached by a customer with a request for a special order for 2,000 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 65% capacity producing 12,000 units.Cost information relating to this current production is shown in the following table:
 $$\begin{array} { | l | r | } 
\hline & \text { Per Unit } \
\hline \text { Sales price } & \$ 6 \
\hline \text { Direct material } & \$ 2.30 \
\hline \text { Direct labor } & \$ 0.87 \
\hline \begin{array} { l } 
\text { Variable } \
\text { overhead }
\end{array} & \$ 0.91 \
\hline \text { Fixed overhead } & \$ 0.70 \
\hline
\end{array}$$ 
The company has been approached by a customer with a request for a special order for 2,000 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 65% capacity producing 12,000 units.Cost information relating to this current production is shown in the following table:
 $$\begin{array} { | l | r | } 
\hline & \text { Per Unit } \
\hline \text { Sales price } & \$ 6 \
\hline \text { Direct material } & \$ 2.30 \
\hline \text { Direct labor } & \$ 0.87 \
\hline \begin{array} { l } 
\text { Variable } \
\text { overhead }
\end{array} & \$ 0.91 \
\hline \text { Fixed overhead } & \$ 0.70 \
\hline
\end{array}$$ 
The company has been approached by a customer with a request for a special order for 2,000 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 65% Capacity Producing 12,000