Question
Parker Plumbing has received a special one-time order for 1,200 faucets (units) at $22 per unit. Parker currently produces and sells 6,000 units at $23.00
Parker Plumbing has received a special one-time order for 1,200 faucets (units) at $22 per unit. Parker currently produces and sells 6,000 units at $23.00 each. This level represents 75% of its capacity. Production costs for these units are $30.00 per unit, which includes $20.00 variable cost and $10.00 fixed cost. To produce the special order, a new machine needs to be purchased at a cost of $900 with a zero salvage value. Management expects no other changes in costs as a result of the additional production. If Parker wishes to earn $1,900 on the special order, the size of the order would need to be: |
55 units.
1,340 units.
2,800 units.
1,400 units.
5,600 units.
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