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 earn $6,000 on the order, what should the unit price be?

Question

Quizplus · Accepted Answer

To calculate the unit price, first determine the total cost for the special order: Variable cost per unit is $420,000 / 70,000 = $6.00. For 3,000 units, variable costs are 3,000 * $6.00 = $18,000. Add the additional shipping cost of $6,300, totaling $24,300. To earn $6,000, the total revenue should be $24,300 + $6,000 = $30,300. Divide by 3,000 units to find the unit price: $30,300 / 3,000 = $10.10.

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 $\quad\$ 420,000$