Question
Panyer Co. is a producer of a tank component. This product, J-5, has the following selling price and costs per unit: Selling price $300 Direct
Panyer Co. is a producer of a tank component. This product, J-5, has the following selling price and costs per unit:
| Selling price | $300 | |
| Direct materials | 125 | |
| Direct labor | 25 | |
| Variable manufacturing overhead | 50 | |
| Shipping and handling | 5 | |
| Fixed manufacturing overhead | 15 | |
| Fixed selling and administrative | 10 | |
| | ||
| Total costs | $230 | |
| |
| Panyer has again received a special, one-time offer for 2,000 units of J-5. Panyer is now operating at full capacity, 10,000 units, at a total cost of $2,300,000. To produce this order would cause a 20% increase in fixed costs. What is the minimum price that is acceptable for this one-time, special order? | |
| A. | $205 |
| B. | $260 |
| C. | $230 |
| D. | $300 |
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started
Advanced Accounting
Authors: Joe Hoyle, Thomas Schaefer, Timothy Doupnik
10th edition
0-07-794127-6, 978-0-07-79412, 978-0077431808
