Curtis cap company has recently been approached by bud

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Curtis Cap Company has recently been approached by Bud Selig, Commissioner of Major League Baseball (MLB), to manufacture 10,000 baseball caps for the 2013 All Star Game to be played at Citi Field in Queens NY next summer. Curtis makes caps similar to the ones requested and the production should not require any additional effort except for a special logo machine it will need to purchase at $8,000. The machine has no other use and would only be used for this one-time order. Curtis sells its caps to wholesalers at a price of $9.95. Selig states that he will is only willing to buy the caps if the price is less than wholesale. Its costs include material of $2.50, labor $2.25 and variable overhead equal to the labor costs. Curtis has determined that there would be no additional fixed costs, except the special machine, and wants to price the caps so that it can earn a profit of $10,000 for the order. Can Curtis meet Selig's pricing request? What price should Curtis Cap Company charge MLB for each cap?

Reference no: EM13574561

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