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Alton Inc. is working at full production capacity producing 25,000 units of a unique product. Manufacturing costs per unit for the product are direct material

Alton Inc. is working at full production capacity producing 25,000 units of a unique product. Manufacturing costs per unit for the product are
direct material 6 10
dirac labor 5 9
manufacturing overhead 7 11
total manufacturing cost per unit 18 30

The unit manufacturing overhead cost is based on a $4 variable cost per unit and $75,000 fixed costs. The nonmanufacturing costs, all variable, are $6 per unit, and the sales price is $31 per unit.

Sports Headquarters Company (SHC) has asked Alton to produce 6,000 units of a modification of the new product. This modification would require the same manufacturing processes. SHC has offered to share the nonmanufacturing costs equally with Alton. Alton would sell the modified product to SHC for $21 per unit.

Contribution margin for $6,000 units for both the curren and special order

Current Sales Order
price per unit 31 21
DM 6 6
DL 5 5
VC 4 4
VM 6 3
variable cost 21 18
CM 10 3
margin per unit 60,000 18,000 answers

Required 2-)

2)-Suppose that Alton Inc. had been working at less than full capacity to produce 20,500 units of the product when SHC made the offer. What is the minimum price that Alton should accept for the modified product under these conditions?

Please answer Required #2. Formulas need to be shown and explanation. thank you

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