The Rewehon department at Greenwich plc manufactures high quality toy cars for customers in the London area. Selected data from the budget for the 12 months ending 31^st December is available: Budget 2000

Sales (90,000 units)	2,700,000
Cost of goods sold (see notes 1 and 2)	1,800,000
Gross profit	900,000
Selling general & administrative overheads (see note 3)	650,000
Profit before tax	250,000

Note 1. Cost of goods sold includes fixed costs of 400,000 Note 2. If production is increased from 90,000 units to 100,000 units per annum it is estimated that fixed costs will increase by 20,000 Note 3. Sales commission on the existing orders is 7.5% of sales and is included in the total cost of 650,000. All other costs are assumed to be fixed. Capacity The current capacity at the factory is 100,000 units per year. In the budget for the year the company expect to sell 90,000 units. New order After agreeing the budget a company in South Africa contacted Greenwich to discuss two orders. This is an unusual situation, as the Rewehon department has never exported before. The first order is for 10,000 units but if the selling price is reduced they will place a larger order. Rewehon have to accept only 1 order. Details of the orders are as follows:

Order 1*
Quantity	10,000 units
Selling price	22 per unit

*The sales commission for this order will increase to 10%. Additional variable shipping costs will be 5% of sales value and additional insurance to export the toy cars will be 3,000. (Also refer to note 2 above)

Order 2**
Quantity	20,000 units
Selling price	21 per unit

**The sales commission for this order will be 10%. Additional variable shipping costs will be 5% of sales value and additional insurance costs will be 8,000. (Also refer to note 2 above) Calculate the minimum price for order 1.

Multiple Choice

• 21.

• 14.

• 12.

• 8.