Blue Chip Company sells gears for $9 per unit. The unit cost of each gear follows: $\begin{array}{lr}
\text { Direct materials } & \$ 1.50 \
\text { Direct labor } & 2.20 \
\text { Manufacturing overhead } & \underline{2.10} \
\text { Total } & \$ 5.80
\end{array}$ An order to purchase 4,000 gears was recently received from a new customer. There is enough capacity to fill the order and filling this order would not disrupt current operations. Blue Chip Company would incur an additional $1.80 per gear for shipping costs. Half of the manufacturing overhead costs are fixed and would be incurred no matter how many units are produced. In negotiating a price, how much is the minimum acceptable selling price?

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The Answer of Blue Chip Company sells gears for $9 per unit. The unit cost of each gear follows: $\begin{array}{lr}
\text { Direct materials } & \$ 1.50 \
\text { Direct labor } & 2.20 \
\text { Manufacturing overhead } & \underline{2.10} \
\text { Total } & \$ 5.80
\end{array}$ An order to purchase 4,000 gears was recently received from a new customer. There is enough capacity to fill the order and filling this order would not disrupt current operations. Blue Chip Company would incur an additional $1.80 per gear for shipping costs. Half of the manufacturing overhead costs are fixed and would be incurred no matter how many units are produced. In negotiating a price, how much is the minimum acceptable selling price?

Blue Chip Company Sells Gears for $9 Per Unit An Order to Purchase 4,000 Gears Was Recently Received from Unit