Pricing decisions. Assume that Ben & Jerry's sells ice cream for $3 per quart. The cost of each quart follows:

One of Ben & Jerry's regular customers asked the company to fill a special order of 400 quarts at a selling price of $2.25 per quart for a special picnic. Ben &
Jfoerr r yt'hse mcoann t hf.il l the order using existing capacity without affecting total fixed costs Ben & Jerry's general manager was concerned about selling the ice cream below the cost of $2.75 per quart and has asked for your advice.

a. Prepare a schedule to show the impact of providing 400 quarts of ice cream on Ben & Jerry's profits in addition to the regular production and sales of 20,000 quarts per month.

b. Based solely on the data given, what is the lowest price per quart at which the ice cream in the special order could be sold without reducing Ben & Jerry's profits?

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Materials Labor Variable overhead Fixed overhead ($20,000 per month, 20,000 quarts per month). Total cost per quart..... $1.00 0.50 0.25 1.00 $2.75