Waldrup Corporation Waldrup Corporation sells a product for $21 per unit, and the standard cost card for the product shows the following costs:
Refer to Waldrup Corporation. Waldrup received a special order for 1,200 units of the product. The only additional cost to Waldrup would be foreign import taxes of $2 per unit. If Waldrup is able to sell all of the current production domestically, what would be the minimum sales price that Waldrup would consider for this special order?

Question

Waldrup Corporation Waldrup Corporation sells a product for $21 per unit, and the standard cost card for the product shows the following costs:
 Refer to Waldrup Corporation. Waldrup received a special order for 1,200 units of the product. The only additional cost to Waldrup would be foreign import taxes of $2 per unit. If Waldrup is able to sell all of the current production domestically, what would be the minimum sales price that Waldrup would consider for this special order?

Quizplus · Accepted Answer

The additional cost per unit for foreign import taxes is $2. Therefore, the total cost per unit for the special order would be:
$16.50 (standard cost) + $2 (foreign import taxes) = $18.50

If Waldrup wants to consider the special order, the minimum sales price per unit would need to cover the total cost per unit of $18.50. Therefore, the minimum sales price for the special order would be:
$18.50 + $2 (profit margin) = $20.50

However, this price is below the normal sales price of $21 per unit. Therefore, Waldrup would consider the special order only if the sales price is higher than the normal sales price. The minimum sales price that Waldrup would consider for this special order is $23 per unit, which includes the $2 profit margin per unit.

Therefore, the best choice is D.

Waldrup Corporation Waldrup Corporation Sells a Product for $21 Per