Question
A company has received a special order for 3,300 units of its product at a special price of $270. The product normally sells for $300
A company has received a special order for 3,300 units of its product at a special price of $270. The product normally sells for $300 and has the following manufacturing costs: Cost per Unit Direct materials $ 102 Direct labor 57 Variable manufacturing overhead 43 Fixed manufacturing overhead 20 Total unit cost $ 222 Assume there is sufficient capacity to fill the order without harming normal production and sales.
Required: If the order is accepted, what effect will it have on the companys short-term profit?
What minimum unit price should the compnay charge to achieve a $85,800 incremental profit?
Now, assume the company is currently operating at full capacity and cannot fill the order without harming normal production and sales. If the order is accepted, what effect will it have on the companys short-term profit?
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