What is the minimum price should charge

Reference no: EM131926034

Question: GTO Mfg., Inc. manufactures a single product (A) with the following full unit costs at a volume of 2,000 units:

Direct materials $ 900

Direct labor 360

Manufacturing overhead 600

Selling expenses (50% variable) 300

Administrative expenses 280

Total per unit $2,440

Note that per unit manufacturing overhead costs include $840,000 fixed costs. Note that per unit administrative expenses include $500,000 fixed costs. A company recently approached GTO Mfg.'s management about buying 350 units of product A. GTO Mfg. currently sells its product to dealers for $2,600 per unit. Capacity is sufficient to produce the extra 350 units. No selling expenses would be incurred on the special order. What is the minimum price GTO Mfg. should charge just to break even on the special order?

Reference no: EM131926034

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