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Problem 1: Fox Company has just received an order from a customer for 1,000 units of a product with total variable costs of $15.00 per unit. Fox Company will have to rent a machine for $10,000, pay overtime amounting to $5,000 to handle this order and fixed the packaging and shipping costs of $2,000 for this order. The production supervisor has just advised that to complete this order, production and sales of 500 units of an existing product, which is sold for $35.00 per unit and has a variable cost of $23.00 per unit, will have to be sacrificed. The minimum price that Fox Company should charge is
Option 1: $38.00
Option 2: $30.00
Option 3: $44.00
Option 4: $15.00
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