Reference no: EM133121562

Question 1 - Thurston Company sells its product for $42 per unit. The company's unit product cost based on the full capacity of 400,000 units is as follows.

Direct materials $8

Direct labor 10

Manufacturing overhead 12

Unit product cost $30

A special order offering to buy 40,000 units has been received from a foreign distributor. The only selling costs that would be incurred on this order would be $6 per unit for shipping. The company has sufficient idle capacity to manufacture the additional units. Two-thirds of the manufacturing overhead is fixed and would not be affected by this order. Assume that direct labor is an avoidable cost in this decision. In negotiating a price for the special order, what is the minimum acceptable selling price per unit?

Question 2 - Sandstrom Company is a small family business that produces wooden plaques and trophies:

The company only has one machine, a sander, to sand the wood that is used for the plaques and trophies. Generally, the wood required for each plaque takes 0.25 hour to sand, while the word required for each trophy takes 0.50 hour to sand. Based on the constraint related to the machine time, which product should be emphasized if only limited machine time is available?