QUESTION 6

1. Laura just received a special order from Jake, a new customer.

   Jake is offering to purchase 5,000 units from Laura for $16 per unit. Jake requires all 5,000 units to come from the same supplier (i.e., he cannot purchase less than 5,000 units).

   The current, normal sales price per unit is $23. Variable costs to produce are $13. Fixed costs per unit are $6.

   Laura has capacity of 25,000 units. Before the special order, Laura estimated that she would be able to sell 22,000 units to existing customers.

   Via a financial perspective, Laura feels she must decline the offer.

   But, she would like to counter Jakes offer with a different selling price.

   Question

   Assuming a financial perspective, what is the lowest price that Laura would be willing to accept for this 5,000 order from Jake?

   Please enter your answer in whole dollars. Please include only numerals (i.e., do not include a $).

12 points

QUESTION 7

1. Please provide your supporting work for your answer to the Laura-Jake question here.

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