Question
The AmazingCandy Company manufactures candy that is sold to food distributors. The company produces at full capacity for six months each year to meet peak
The AmazingCandy Company manufactures candy that is sold to food distributors. The company produces at full capacity for six months each year to meet peak demand during the"candy season" from Halloween throughValentine's Day. During the other six months of theyear, the manufacturing facility operates at75% of capacity. The AmazingCandy Company provides the following data for theyear:
Data Table
Cases of candy produced and sold 1,900,000 cases
Sales price $40.00 per case
Variable manufacturing costs 22.00 per case
Fixed manufacturing costs 6,900,000 per year
Variable selling and administrative costs 3.00 per case
Fixed selling and administrative costs 3,100,000 per year
The AmazingCandy Company receives an offer to produce 6000 cases of candy for a special event. This is aone-time opportunity during a period when the company has excess capacity. What is the minimum selling price The AmazingCandy Company should accept for theorder? Explain why.
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