Question
Bassett Inc. manufactures leather sofas that it normally sells for $4,500 per sofa. A large retailer has offered to buy 200 sofas at a reduced
Bassett Inc. manufactures leather sofas that it normally sells for $4,500 per sofa. A large retailer has offered to buy 200 sofas at a reduced price. The normal per-unit manufacturing costs are as follows:
Direct material $1,425
Direct labor $300
Variable manufacturing overhead $495
Fixed manufacturing overhead $1,075
Bassett has the capacity to fill the special order, but its employees will have to work overtime, which will increase the per-unit direct labor costs by 50%. In addition, Bassett will incur $18,000 of additional, one-time costs in connection with the order. What is the break-even selling price for the special order? _____________
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