Question
Minor Electric has received a special one-time order for 1,500 light fixtures (units) at $15 per unit. Minor currently produces and sells 7,500 units at
Minor Electric has received a special one-time order for 1,500 light fixtures (units) at $15 per unit. Minor currently produces and sells 7,500 units at $16.00 each. This level represents 75% of its capacity. Production costs for these units are $19.50 per unit, which includes $13.00 variable cost and $6.50 fixed cost. To produce the special order, a new machine needs to be purchased at a cost of $725 with a zero salvage value. Management expects no other changes in costs as a result of the additional production. If Minor wishes to earn $1,375 on the special order, the size of the order would need to be: |
1) 2,100 units.
2) 4,200 units.
3) 100 units.
4) 1,050 units.
5) 935 units.
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