Question
Start Company has received an order to produce 1,000 units of a new product. The new product will require $120 per unit for materials and
Start Company has received an order to produce 1,000 units of a new product. The new product will require $120 per unit for materials and labor and will require four hours of machine time to produce. If this order is accepted Start Company must supply all 1,000 units.
Start Company currently produces a single product, which has a selling price per unit of $90 and has total variable costs of $60. Each unit of this product requires two hours of machine time to produce.
Start Company has 25,000 hours of machine time available and is now using 24,000 hours.
What is the minimum total (floor) price Start Company should consider for this special command?
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