Question
Northern Optical ordinarily sells the X-lins for $50. The variable production cost is $10, the fixed production cost is $18 per unit, and the variable
Northern Optical ordinarily sells the X-lins for $50. The variable production cost is $10, the fixed production cost is $18 per unit, and the variable selling cost is $1. A customer has requested a special order for 10,000 units of the X-lens to be imprinted with the customers logo. This special order would not involve any selling costs, but Northern Optical would have to purchase an imprinting machine for $50,000. There is ample idle capacity to fulfill the order and the imprinting machine has no further use after this order.
What is the minimum price Northern Optical will accept?
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