What is the minimum price per unit

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Question - The CFO of MetalCo prepares a bid for a large special order of part A115 to be produced next month. She wants to know the lowest price she could quote and still break even (i.e. make exactly zero profit). MetalCo recently lost a major customer and expects to have a lot of unused capacity in the foreseeable future. Nevertheless, top management made a strategic decision not to lay off any production workers because of their unique training and commitment to corporate culture. The following information on A115 is available:

A115

Average sales price 122

Direct labor 16

Direct material 29

Allocation of variable overhead 5

Allocation of fixed overhead 53

Required - What is the minimum price per unit the CFO needs to bid to make exactly zero profit on the special order of A115?

Reference no: EM133057009

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