continue question for P2-8

opportunity to sell 20,000 units in an overseas market. Import duties, foreign permits, and other special costs associated with the order would total $14,000. The only selling costs that would be associated with the order would be a $1 per unit shipping cost. Compute the per unit break-even selling price on this order. c. One of the materials used in the production of widgets is obtained from a foreign supplier. Civil unrest in the supplier's country has cut off material shipments. The situation is expected to last for three months. Royal Company has enough materials on hand to produce 25% of its normal output for the three-month period. As an alternative, the company could close the plant down entirely for the three months. Closing the plant would reduce manufacturing support costs by 40% during the three-month period. Fixed selling expenses would be reduced to 25% of their current levels. What would be the impact on after-tax income if the plant is closed for the three-month period? Make a recommendation. State one disadvantage of your recommendation. d. The company has 500 widgets on hand that were produced last month. These have small blemishes that make it impossible to sell these units at the normal price. Calculate the minimum selling price needed to recover costs if they are sold through regular distribution channels. e. An outside manufacturer has offered to produce all of Royal's widgets and ship them directly to Royal's customers. If Royal accepts this offer, its production facilities would be idle. However, manufacturing support costs would continue at 30% of their current level. Because the outside manufacturer would pay for most of the shipping costs, Royal's variable selling expenses would be reduced by 60%. Compute the maximum per-unit cost that Royal should be willing to pay to the supplier. f. Assume that the manufacturer in (e) will produce the widgets for $2 less per unit than Royal's cost to produce them. Why might Royal not accept this offer