Question
Minor Electric has received a special one-time order for 600 light fixtures (units) at $8 per unit. Minor currently produces and sells 3,000 units at
Minor Electric has received a special one-time order for 600 light fixtures (units) at $8 per unit. Minor currently produces and sells 3,000 units at $9.00 each. This level represents 75% of its capacity. Production costs for these units are $9.00 per unit, which includes $6.00 variable cost and $3.00 fixed cost. To produce the special order, a new machine needs to be purchased at a cost of $550 with a zero salvage value. Management expects no other changes in costs as a result of the additional production. If Minor wishes to earn $850 on the special order, the size of the order would need to be:
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