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Problem-
Slugger Products manufactures a single product 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 Slugger's management about buying 200 units of product. Slugger currently sells its product to dealers for $2,600 per unit. Capacity is sufficient to produce the extra 200 units. No selling expenses would be incurred on the special order.
Additional information-
This problem relates to Basic Accounting problem and it discuss about calculation of minimum price for break-even for a product of special order.
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