Question
Company A has excess capacity. Company management has been approached by a new customer to fill a large one-time order for 500 widgets, a product
Company "A" has excess capacity. Company management has been approached by a new customer to fill a large one-time order for 500 widgets, a product similar to one offered to regular customers. The following information applies to sales to regular customers:
Sales (10,000 units) $5,000,000
Direct materials $2,000,000
Direct labour 1,000,000
Variable manufacturing support 300,000
Fixed manufacturing support 100,000
Total manufacturing costs 3,400,000
Profit $1,600,000
What is the price for each additional widget at which overall profit will not change - REQUIRED with Calculation
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