Question
8 Points) Steve Company manufactures a variety of sunglasses. Production information for its most popular line, the Clear Vista (CV), follows: Per Unit Sales price
8 Points) Steve Company manufactures a variety of sunglasses. Production information for its most popular line, the Clear Vista (CV), follows: Per Unit Sales price $ 37.50 Direct materials 6.00 Direct labor 3.50 Variable manufacturing overhead 2.75 Fixed manufacturing overhead 5.00 Total manufacturing cost $ 17.25 Steve has been approached about producing a special order for 2,000 units of custom CV sunglasses for a new semiprofessional volleyball league. All units in the special order would be produced in the leagues signature colors with a specially designed logo emblem attached to the side of the glasses. The league has offered to pay $14.50 per unit in the special order. Additional costs for the special-order total $1.05 per unit for mixing the special frame color and purchasing the emblem with the leagues logo that will be attached to the glasses. In addition, Steve would have to buy a special mixing machine for the frame color for $2,500. Required: 1. Assume Steve has the idle capacity necessary to accommodate the special order. Calculate the additional profit Steve would make by accepting the special order. 2. Calculate the special-order price per unit at which Steve is indifferent between accepting or rejecting the special order. (Round your answer to 2 decimal places.)
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