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Question - Firm A sells 25,000 frisbees per year for $18 each and incurs the following costs:
Variable manufacturing costs $125,000
Fixed manufacturing costs $110,000
Variable selling and administrative costs $85,000
Fixed selling and administrative costs $40,000
A major retailer wants to buy a special order of 6,000 frisbees at a special price. Firm A will not suffer any changes to its fixed costs by taking the order. What is the minimum price at which Firm A can sell the special order frisbees in order to not take a loss on the sale?
a. $6.00
b. $10.50
c. $18.00
d. $8.40
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