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What is the minimum selling price that should be set

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Question - LY make and sell the "KM," a wall hanging depicting a witch. The KM are sold at specialty shops for P50 each. The capacity of the plant is 15,000 units per year. Costs to manufacture and sell each wall hanging are as follows:

Direct material P 5.00

Direct labor 6.00

Variable overhead 8.00

Fixed overhead 10.00

Variable selling expenses 2.50

LY have been approached by an Tagalog company about purchasing 2,500 units. The company is currently making and selling 15,000 per year. The Tagalog company wants to attach its own label, which increases costs by P.50 each. No selling expenses would be incurred on this order. LY believe that they must make an additional P1 on each wall hanging to accept this offer.

What is the minimum selling price that should be set?

Reference no: EM133122745

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