Question
Chapman company sells its product for $42 per unit. The companys unit product cost, based on the full capacity of 400,000 units is as follows:
Chapman company sells its product for $42 per unit. The companys unit product cost, based on the full capacity of 400,000 units is as follows: direct materials $8, direct labor $10, manufacturing overhead $12. A special order offering to buy 40,000 units has been received from a foreign distributor. The only selling costs that would be incurred on this order would be $6 per unit for shipping. The company has sufficient idle capacity to manufacture the additional units. Assume that of the manufacturing overhead above is a fixed cost.
In negotiating a price for the special order , what is the minimum acceptable selling price per unit?
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