Question

Pembroke Furniture manufactures rustic furniture.The cost accounting system estimates manufacturing costs to be $80 per table, consisting of 70% variable costs and 30% fixed costs, based on a current production level of 15,000.Total capacity is 16,000.The current selling price is $100 per unit.

The company just received a special order for 2,000 tables.This special order will be delivered to the customer as a single delivery, and will require extra shipping and storage costs of $50,000.As well, packaging costs will be reduced by $6/unit for the special order.

Required

What is the minimum selling price they should accept for this special order?

Besides costs, briefly describe what other considerations should be included in accepting or rejecting this special order.