Reference no: EM133043073

Question - McMahon Corporation's Olympia plant produces a module used in automobile manufacturing. The company's practical capacity is 5, 800 modules per week. The selling price is $930 per module. Production this quarter is 5,000 modules per week and all of the modules produced are sold each week. Demand is expected to remain steady. Total costs of production this week at the level of 5,000 modules were $310,000 of fixed costs plus S4.000.000 of variable costs. Suppose that a new customer's supplier has an emergency need for 1,300 modules to be delivered next week and that the plant cannot schedule overtime production. Consequently, McMahon would have to give up some of its current sales to fill the new order Total selling and administrative costs would not change if McMahon accepts the order. What is the minimum (floor) price that McMahon should charge for the new order?