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What is the minimum price that the division would consider

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Reference no: EM132081056

Question - The Southern Digital, Inc. produces a high-quality computer chip. Unit production costs (based on capacity production of 100,000 units per year) follow:

Direct material

$50

Direct labor

20

Overhead (20% variable)

10

Other information:

Sales price

100

SG&A costs (40% variable)

15

Refer to Southern Digital, Inc. Assume, for this question only, that the Memory Division is operating at a level of 70,000 chips per year. What is the minimum price that the division would consider on a "special order" of 1,000 chips to be distributed through normal channels?

Reference no: EM132081056

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