Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Salisbury Corporation has been producing and selling 30,000 caps a year. The company has the capacity to produce 50,000 caps. with its present facilities.

image text in transcribed

Salisbury Corporation has been producing and selling 30,000 caps a year. The company has the capacity to produce 50,000 caps. with its present facilities. The following information is also available: Selling price per unit: $35 Variable costs per unit: Manufacturing $14 Selling and Administrative $6 Fixed costs in total: Manufacturing $128,000 $56,000 Selling and Administrative Gilbert Company has contacted Salisbury about purchasing 10,000 units at $24 each. A new customer who wants 20,000 units (all or nothing) right now also contacted Salisbury. Salisbury is wondering if they should sell to Gilbert Company or should take the offer by the new customer. Unfortunately, Salisbury cannot take both offers. For the new customer, variable selling and administrative costs would not be incurred. What is Salisbury's minimum price in order for them to accept the offer from the new customer (instead of Gilbert Company)? Salisbury Corporation has been producing and selling 30,000 caps a year. The company has the capacity to produce 50,000 caps. with its present facilities. The following information is also available: Selling price per unit: $35 Variable costs per unit: Manufacturing $14 Selling and Administrative $6 Fixed costs in total: Manufacturing $128,000 $56,000 Selling and Administrative Gilbert Company has contacted Salisbury about purchasing 10,000 units at $24 each. A new customer who wants 20,000 units (all or nothing) right now also contacted Salisbury. Salisbury is wondering if they should sell to Gilbert Company or should take the offer by the new customer. Unfortunately, Salisbury cannot take both offers. For the new customer, variable selling and administrative costs would not be incurred. What is Salisbury's minimum price in order for them to accept the offer from the new customer (instead of Gilbert Company)?

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Financial and Managerial Accounting

Authors: Carl S. Warren, James M. Reeve, Jonathan Duchac

12th edition

ISBN: 978-1133952428, 1285078578, 1133952429, 978-1285078571

More Books

Students also viewed these Accounting questions

Question

What are the premises for successful paleostress analysis?

Answered: 1 week ago