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?