Reference no: EM133065171

Questions -

Q1. Zena Technology sells arc computer printers for $55 per unit. Unit product costs are:

Costs Amounts

Direct materials $14

Direct labor 20

Manufacturing overhead 3

A special order to purchase 15,000 arc printers has recently been received from another company and Zena has idle capacity to fill the order. Zena will incur an additional $2 per printer for additional labor costs due to a slight modification the buyer wants made to the original product. One-third of the manufacturing overhead costs is fixed and will be incurred no matter how many units are produced. When negotiating the price, what is the minimum selling price per unit that Zena should accept for this special order?

Q2. Zena Technology sells arc computer printers for $55 per unit. Unit product costs are:

Costs Amounts

Direct materials $12

Direct labor 19

Manufacturing overhead 4

A special order to purchase 12,303 arc printers has recently been received from another company and Zena has idle capacity to fill the order. Zena will incur an additional $5 per printer for additional labor costs due to a slight modification the buyer wants made to the original product. One-third of the manufacturing overhead costs is fixed and will be incurred no matter how many units are produced.

When negotiating the price, what is the minimum selling price per unit that Zena should accept for this special order?

Q3. Shelby Industries has a capacity to produce 45,000 oak shelves per year and is currently selling 40,000 shelves for $32 each. Martin Hardwoods has approached Shelby about buying 1,200 shelves for a new project and is willing to pay $26 each. The shelves can be packaged in bulk; this saves Shelby $1.50 per shelf compared to the normal packaging cost. Shelves have a unit variable cost of $27 with fixed costs of $350,000. Because the shelves don't require packaging, the unit variable costs for the special order will drop from $27 per shelf to $25.50 per shelf. Shelby has enough idle capacity to accept the contract. What is the minimum price per shelf that Shelby should accept for this special order?