Question
Glow Sticks Corporation manufactures and sells glow-in-the-dark necklaces for $10 each. The company has the capacity to produce 25000 necklaces in a year but is
Glow Sticks Corporation manufactures and sells glow-in-the-dark necklaces for $10 each. The company has the capacity to produce 25000 necklaces in a year but is currently producing and selling 20000 necklaces per year. The company currently is incurring the following costs at its current production level of 20000 necklaces:
Variable manufacturing costs $ 60000 Fixed manufacturing costs $ 90000 Variable selling and administrative costs $ 75000 Fixed selling and administrative costs $ 50000 An amusement park is interested in purchasing the excess capacity of 5000 necklaces if it can receive a special price. This special order would not affect Glow Sticks Corporations regular sales or its cost structure. Glow Sticks Corporations profits would increase from this special order if the special order price per necklace is greater than:
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