Question
Minor Electric has received a special one-time order for 1200 light fixtures (units) at $10.00 per unit. Minor currently produces and sells 6000 units at
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Minor Electric has received a special one-time order for 1200 light fixtures (units) at $10.00 per unit. Minor currently produces and sells 6000 units at $11.00 each. This level represents 75% of its capacity. Production costs for these units are $12.00 per unit, which includes $8.00 variable cost and $4.00 fixed cost. To produce the special order, a new machine needs to be purchased at a cost of $600 with a zero salvage value. Management expects no other changes in costs as a result of the additional production. If Minor wishes to earn $1000 on the special order, the size of the order would need to be:
1600 units.
120 units.
3200 units.
800 units.
650 units.
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