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shoes at a normal selling price of $50 per unit (pair). Per unit cost information, based upon an existing capacity level of 200,000 units is
shoes at a normal selling price of $50 per unit (pair). Per unit cost information, based upon an existing capacity level of 200,000 units is provided below 1) spts: McBride & Cline (MC), Inc, currently sells the "Sprocket Gray" brand of quality leather 200000 Direct Materials Direct Labor S8 S7 Total Overhcad (1/4 of which is fixed) a) A special order inquiry to buy 40,000 units was recently received from Rogers & Durliat (RD), Inc. an overseas distributor. Additional selling costs of SI per unit (pair) would be incurred by MC to ship addit the product overseas to Rogers & Durliat. MC, Ine, has sufficient existing capacity to manufacture the ional units. In preparation for difficult negotiations with RD, what amount should MC, Inc. set as the minimum (floor) selling price per unit (in order to recover all relevant costs)? Explain your answer b) Referring to part "a", and using the equation method from Chapter 3, what minimum per unit selling price should MC, Inc. charge if the company requires an incremental pretax profit of $100,000 on this special order? Explain your answer, showing all computations below. c) Referring to part "a", and using the equation method from Chapter 3, what minimum selling price should MC, Inc. charge if the company requires an incremental after-tax profit of $100,000 on this special order? Assume a 30% income tax rate (due to the recent income tax rate reduction). d) Referring to part "a", what would be (on a quantitative basis) the minimum per unit selling price if no excess production capacity existed (i.e. the company is currently producing, and a market exists to sell, all 200,000 pair)? Provide a defendable explanation for this Chp 6 decision
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