Question
Sleepy Manufacturing currently produces 1,000 bicycles per month and has capacity for 2,000 bicycles. The following per unit data apply for sales to regular customers:
Sleepy Manufacturing currently produces 1,000 bicycles per month and has capacity for 2,000 bicycles. The following per unit data apply for sales to regular customers:
Selling price $100
Variable manufacturing cost 50
Variable marketing cost 5
Fixed manufacturing cost 20
Fixed marketing cost 10
(a) What is the cost per unit if Sleepy produces 2,000 bicycles per month?
(b) The firm has received an offer to sell 1,000 bicycles. What is the minimum price per nit the firm should be willing to accept for this offer?
(c) The firm no longer has an offer to sell 1,000 bicycles and has instead received an offer to sell 1,500 bicycles. What is the minimum price per unit the firm should be willing to accept for this larger offer?
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started