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The Young Company has gathered the following information for a unit of its most popular product: Direct materials $ 14 Direct labor 6 Overhead (40%
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) | 20 | ||
Cost to manufacture | 40 | ||
Desired markup (50%) | 20 | ||
Target selling price | $ | 60 | |
The above cost information is based on 10,200 units. A distributor has offered to buy 3,200 units at a price of $45 per unit. The distributor claims this special order would not disturb regular sales at $60. Special packaging and other selling expenses would be an additional $0.50 per unit for the special order. How many units of regular sales could be lost before this contract is not profitable?
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