Question
23. The budgeted income for RST Ltd. for next year is as follows: Sales 125,000 units @ $40 $5,000,000 Variable manufacturing costs $2,000,000 Fixed manufacturing
23. The budgeted income for RST Ltd. for next year is as follows:
Sales 125,000 units @ $40 $5,000,000 Variable manufacturing costs $2,000,000 Fixed manufacturing costs 1,250,000 Sales commissions - $2.60 per unit 325,000 Fixed selling and administration expenses 950,000 4,525,000 Operating income $ 475,000
Assume that a regular customer has requested RST Ltd. to provide a quote for a special order of 20,000 units. RST Ltd. has sufficient capacity to fill the order and would be required to pay only $8,000 in sales commissions for the order. If RST Ltd. would like the special order to make a contribution to operating income of $48,000, the sales price per unit that should be quoted to the customer for the special order is
a) $40.00.
b) $20.20.
c) $28.80.
d) $36.40.
e) $18.80.
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