Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Preston Wade, a local craftsman, normally sells his handcrafted wooden birdhouses for $88 each. Preston has the capacity to produce as many as 50 birdhouses
Preston Wade, a local craftsman, normally sells his handcrafted wooden birdhouses for $88 each. Preston has the capacity to produce as many as 50 birdhouses a week. In a normal week, Preston makes 20 birdhouses with the following costs per unit: Direct materials $ 5.00 Direct labor $20.00 Variable overhead $ 4.00 Fixed overhead $ 2.00 Refer to the Preston Wade information above. Preston has received a special order from a local plant nursery for 25 birdhouses. The nursery wishes to have the birdhouses engraved with their own logo, therefore, the order would require the rental of a special engraving tool at a cost of $200. Preston requires a minimum $2,000 profit on any special order. The minimum price per birdhouse that Preston should charge the nursery is: Answer a. $80 b. $89 c. $117 d. $119
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