D'Arien Company incurred the following costs for 70000 units: Variable costs $420000
Fixed costs 392000
D'Arien has received a special order from an Armenian company for 3000 units. There is sufficient capacity to fill the order without jeopardizing regular sales. Filling the order will require spending an additional $6600 for shipping.
If D'Arien wants to break even on the order what should the unit sales price be?

Question

Quizplus · Accepted Answer

Contribution margin per unit = (Variable cost per unit + Shipping cost per unit)= ($420000/70000 + $6600/3000)= $6 + $2.20= $8.20Therefore, the unit sales price should be $8.20 to break even on the order.

D'Arien Company Incurred the Following Costs for 70000 Units: Variable