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Alpine, Inc., has been experiencing losses for some time, as shown by its most recent income statement: ALPINE, INC. Income Statement For the year ended
Alpine, Inc., has been experiencing losses for some time, as shown by its most recent income statement: ALPINE, INC. Income Statement For the year ended June 30, 2011 Sales (40,000 Units at $12) $480,000 Less: Cost of Goods Sold Direct Materials $120,000 Direct Labor 65,600 Manufacturing Overhead 90,000 275,600 Gross Margin 204,400 Less: Operating expenses: Selling expenses: Variable: Sales Commissions $38,400 Shipping 14,000 52,400 Fixed (Advertising, salaries) 110,000 Administrative expenses: Variable (billing, other) 3,200 Fixed (salaries, other) 85,000 250,600 Net Loss $(46,200) All variable expenses in the company vary in terms of units sold, except for sales commissions, which are based on sales dollars. Variable manufacturing overhead is 50 cents per unit. The companys plant has a capacity of 70,000 units. Management is particularly disappointed with 2011s operating results. Several possible courses of action are being studied to determine what should be done to make 2012 profitable. REQUIRED: 5. Refer to the original data. Assume that the company was approached by an overseas distributor who wanted to purchase 15,000 units on a special price basis during June 2011. There would be no sales commission on these units. However, shipping costs would increase by 80 percent per unit, and variable administrative costs would be reduced by 50 percent per unit on these special order units. In addition, Alpine, Inc., would have to pay a foreign import duty of $3,150 on behalf of the overseas distributor in order to get the goods into the country. Given these data, what unit price would have to be quoted on the 15,000 units by Alpine, Inc., to allow the company to earn an overall profit of $18,000 for the year ended June 30, 2011 on total operations? Regular business would not be disturbed by this special order. 10 pts. _____
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