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Younes Inc, manufactures industrial components. One of its products, which is used in the construction of industrial air conditioners, is known as P06. Data concerning
Younes Inc, manufactures industrial components. One of its products, which is used in the construction of industrial air conditioners, is known as P06. Data concerning this product are given below: Per Unit Selling price $220 Direct materials $ 38 Direct labor $ 1 Variable manufacturing overhead $ 8 Fixed manufacturing overhead $ 16 Variable selling expense $ 4 Fixed selling and administrative expense $ 16 The above per unit data are based on annual production of 4,000 units of the component. Assume that direct labor is a variable cost. The company has received a special, one-time-only order for 500 units of component P06. There would be no variable selling expense on this special order and the total fixed manufacturing overhead and fixed selling and administrative expenses of the company would not be affected by the order. However, assume that Younes has no excess capacity and this special order would require 30 minutes of the constraining resource, which could be used instead to produce products with a total contribution margin of $10,000. What is the minimum price per unit below which the company should not accept the special order? The management of Furrow Corporation is considering dropping product LOVE. Data from the company's budget for the upcoming year appear below: Sales Variable expenses Fixed manufacturing expenses Fixed selling and administrative expenses $830,000 $365,000 $291,000 $166,000 In the company's accounting system all fixed expenses of the company are fully allocated to products. Further investigation has revealed that $186,000 of the fixed manufacturing expenses and $106,000 of the fixed selling and administrative expenses are avoidable if product LOVE is discontinued. The financial advantage (disadvantage) for the company of eliminating this product for the upcoming year would be
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