Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

The Tamarisk packages and distributes three grades of animal feed. The material cost per tonne and estimated annual sales for each of the products are

image text in transcribed

The Tamarisk packages and distributes three grades of animal feed. The material cost per tonne and estimated annual sales for each of the products are listed here: Material Estimated Product Cost Sales Super Premium $ 9.00 2,200 tonnes Premium 7.25 2,700 tonnes Economy 6.00 4,700 tonnes The fixed cost of operating the machinery used to package all three products is $10,100 per year. In the past, prices have been set by allocating the fixed operating cost to products on the basis of estimated sales in tonnes. The resulting full costs (material costs plus allocated fixed operating cost) are then marked up 0%. The Tamarisk has received an offer from a foreign firm for 1,000 tonnes of the premium-grade feed. Sales to the foreign firm would not affect domestic sales but would require a $1,800 increase in fixed production costs. (c) Using only quantitative information, what is the minimum price that the Tamarisk's managers should be willing to accept from the foreign firm? Price for order: $

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

101 Recipes For Audit In Psychiatry

Authors: Clare Oakley, Floriana Coccia, Neil Masson, Iain McKinnon, Meinou Simmons

1st Edition

1908020016, 978-1908020017

More Books

Students also viewed these Accounting questions