Details: The Rich Coffee Company is a single product firm which manufactures and markets granulated coffee in
Question:
Details:
The Rich Coffee Company is a single product firm which manufactures and markets granulated coffee in large containers exclusively for commercial use. The company has manufacturing capacity of 240,000 units per annum. Details relating to the past 12 months are as follows:
Sales (160,000 Units) $7,200,000
Cost of Goods Sold $5,000,000
Gross Profit $2,200,000
Operating Expenses $1,240,000
NPBT $960,000
Tax (30%) $288,000
NPAT $672,000
An analysis of manufacturing costs and period expenses has revealed that total variable costs are $25 per unit sold, while fixed operating expenses amount to $440,000 per annum.
Question:
A sales enquiry is received from an overseas firm. What would be the minimum price at which coffee could be sold to the overseas firm assuming total domestic sales of 55,000 units per annum at a price of $46 per unit? The Rich Coffee Company requires an after tax return of 9% on total revenue. The order is for 20,000 cans.how?
Expert Answer:
To determine the minimum price at which the coffee can be sold to the overseas firm we need to calcu... View the full answer
