Question
The Young Company has gathered the following information for a unit of its most popular product: Direct materials$14 Direct labor$6 Overhead (40% variable)$10 Cost to
The Young Company has gathered the following information for a unit of its most popular product:
Direct materials$14
Direct labor$6
Overhead (40% variable)$10
Cost to manufacture$30
Desired markup (50%)$15
Target selling price $45
The above cost information is based on 11,800 units. A distributor has offered to buy 2,100 units at a price of $34 per unit. The distributor claims this special order wouldnotdisturb regular sales at $45. Special packaging and other selling expenses would be an additional $0.60 per unit for the special order. How many units of regular sales could be lost before this contract isnotprofitable?
940 units.
0 units.
1,050 units.
2,100 units.
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