Question 6 (1 point)

PowerDrive, Inc. produces a hard disk drive that sells for $175 per unit. The cost of producing 25,000 drives in the prior year was:
Direct material		$625,000
Direct labor		375,000
Variable overhead		125,000
Fixed overhead		1,500,000
Total cost		$2,625,000

At the start of the current year, the company received an order for 3,000 drives from a computer company in China. Management of PowerDrive has mixed feelings about the order. On the one hand they welcome the order because they currently have excess capacity. Also, this is the companys first international order. On the other hand, the company in China is willing to pay only $140 per unit.

What will be the effect on profit of accepting the order?

Round to two decimal places.

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Question 7 (1 point)

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Another name for menu-based pricing is:

Question 8 (1 point)

A company has $40 per unit in variable costs and $1,200,000 per year in fixed costs. Demand is estimated to be 110,000 units annually. What is the price if a markup of 40% on total cost is used to determine the price?

Round to two decimal places.

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Question 8 options:

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