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Finding out the minimum selling price acceptable to manufacturer.
Generators, Inc. produced emergency backup generators for use in large commercial buildings. The costs of manufacturing and marketing the generators at the company's normal volume of 3,000 units per month are shown.
Costs per Unit for Generators
Unit Manufacturing costs:
Variable Materials
$1,000
Variable Labor
1,500
Variable Overhead
500
Fixed Overhead
1,200
Total Manufacturing Cost
$4,200
Unit Marketing Costs:
Variable
Fixed
1,400
Total Marketing Cost
1,900
Total Unit Cost:
$6,100
The following questions refer only to the data given above. Unless otherwise stated, assume there is no connection between situations described in each of the questions, each is to be treated independently. Unless otherwise stated, a regular selling price of $7,400 per unit should be assumed.
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