The company produces bikes. Practical capacity of production - 15 000 units. Company produces 10 000 bikes.

To produce one bike company uses: direct materials - 50 $, direct labor - 10 $.

Manufacturing overhead for production and sales of 10 000 units - 500 000 $, 30 % of overhead - variable overhead.

To set the price company uses formula "variable costs per unit + 60 % of variable costs"

Company may accept time-one-only order: 5000 bikes, price - 82 $. This order requires additional fixed costs - 15 000 $.

1. What is a price of one bike?

2. For the price from point(1) what is a mark-up as company uses formula "average total production costs+" (production = 10 000 units).

3. Prepare profit statement under marginal approach as company produces and sells 10 000 units of product.

4. Justify the decision about acception or rejection of time-one-only order. Should company accept it?

5. Comapny has possibility to rent unused capacity for 40 000 $ per year. What price of one bike should be in the one-time-only order to provide the same financial result as rent of capacity?