Reference no: EM132536498

The following data relate to a year's budgeted activity (100,000 units) for Lucky Locks, a single-product company:

Per Unit

Selling Price                                                           $5.00

Variable manufacturing cost                                    $1.00

Variable marketing cost                                           $2.00

Fixed manufacturing cost (based on 100,000 units)      $0.25

Fixed marketing cost (based on 100,000 units)               $0.65

• Total fixed costs remain unchanged between 25,000 units and total capacity of 160,000 units.
• Lucky received an order for 20,000 units to be used in an unrelated market. The sale requires production of 20,000 extra units to be used in an unrelated market.

Question 1: What price per unit should Lucky charge on the special order to increase its operating profit by $30,000?

Select one:

a. $ 5.00

b. $ 3.00

c. $ 3.50

d. $ 4.50