Martin Company incurred the following costs for 70,000 units: Variable costs $\quad \$ 420,000$
Fixed costs $\quad 392,000$ Martin has received a special order from a foreign company for 3,000 units. There is sufficient capacity to fill the order without jeopardizing regular sales. Filling the order will require spending an additional $6,300 for shipping.
If Martin wants to break even on the order, what should the unit sales price be?

Question

Quizplus · Accepted Answer

To break even, the sales price per unit must cover the variable cost per unit plus the additional shipping cost per unit. The variable cost per unit is $420,000 / 70,000 = $6.00. The additional shipping cost per unit is $6,300 / 3,000 = $2.10. Therefore, the break-even sales price per unit is $6.00 + $2.10 = $8.10.

Martin Company Incurred the Following Costs for 70,000 Units: Variable $420,000\quad \$ 420,000$420,000

Martin Company Incurred the Following Costs for 70,000 Units: Variable $\quad \$ 420,000$