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Industrial Bearings manufactures high quality ball bearings. The cost of producing a box of 100 bearings is as follows: $2.50 3.25 Direct materials Direct labor
Industrial Bearings manufactures high quality ball bearings. The cost of producing a box of 100 bearings is as follows: $2.50 3.25 Direct materials Direct labor Variable factory overhead Fixed factory overhead Variable selling, general, and administrative costs Fixed selling, general, and administrative costs 8.75 12.00 8.75 2.00 The fixed factory overhead and fixed SG&A cost is allocated based on an assumption that the business will produce 200,000 boxes of paintballs per year. The company has capacity to produce 300,000 boxes without impacting either category of fixed cost. www. a) The market for bearings has become very competitive and management has requested to know the break-even price that can be charged for a box of bearings, assuming production and sale of 200,000 boxes. b) Management has received a special order request for 100,000 boxes of "private label" bearings. The order specifies a per box price of $35. How will profitability be impacted if the order is accepted? order is accepted? RE S ULTS EEEEEEEEEEEE E EE Worksheet 2 b)
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