Question
Barry Industries has an annual plant capacity of 71000 units; current production is 56000 units per year. At the current production volume, the variable cost
Barry Industries has an annual plant capacity of 71000 units; current production is 56000 units per year. At the current production volume, the variable cost per unit is $27 and the fixed cost per unit is $4.40. The normal selling price of 's product is $50.00 per unit. Barry has been asked by Dexter Company to fill a special order for 11,000 units of the product at a special sales price of $23.00 per unit. Dexter is located in a foreign country where Barry does not currently operate. Dexter will market the units in its country under its own brand name, so the special order is not expected to have any effect on Barry's regular sales.
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