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Question 4 Pope Industries manufactures widgets. The plant facilities have a maximum production capacity of 350,000 units. Current production and sales are at 325,000
Question 4 Pope Industries manufactures widgets. The plant facilities have a maximum production capacity of 350,000 units. Current production and sales are at 325,000 units at a selling price of $70 per unit. For fiscal year 2020, the company is reporting $11,765,000 in variable costs and $4,160,000 in fixed costs. Required 1. If the company received a one-time special order, what is the minimum bid price per unit? 2. The company has received two special orders, one from Green Company and the other from Blue Company. The company will not be able to fill both orders. Evaluate each order and determine which order the company should select. a. Green Company - requires 35,000 units and has offered to pay $65 per unit. The order will require additional machining time which will cost the company an additional variable cost of $15 per unit. b. Blue Company - requires 45,000 units and has offered to pay $40 per unit. Due to the nature of the order, the company estimates that on a per unit basis, variable costs will be reduced by 30%. The variable cost reduction is only for the 45,000-unit special order. Regular units will still incur the variable costs calculated in Requirement 1.
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