Question
Corp makes widgets. Variable costs per unit are $4. Fixed cost per unit (at an output level of 100) are $2 per unit. The normal
Corp makes widgets. Variable costs per unit are $4. Fixed cost per unit (at an output level of 100) are $2 per unit. The normal sales price per unit is $10. A special-order customer approaches Corp offering to buy 40 widgets. Assume there is no excess capacity. Assume that, to fill the special order, Corp must buy and completely use up (no future use) a special material for $100
What price would Corp need to charge, per unit, for the special order so that operating income will be the same whether or not it accepts the special order?
A) 11.50
B) 12.50
C) 10
D) 11
E) 11.25
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