Reference no: EM13788917
June Company produces a single product . The cost of producing and selling a single unit of company's product at the company's normal activity level of 40,000 units per month is as follows :
Direct Materials : $53.60
Direct Labor : $5.30
Variable Manufacturing Overhead : $1.40
Fixed Manufacturing Overhead : $13.20
Variable Selling and Admin Expense : $1.60
Fixed Selling and Admin Expense : $ 9.10
The normal selling price of the product is $91.60 per unit. An order has been received from an overseas customer for 3,000 units at a special discounted price. This order would have no effect on the company's normal sales and would not change the total amount of company's fixed costs. The variable selling and admin expense would be $1 less per unit on this order than on normal sales.
QUESTION: Suppose there is no idle capacity to produce all of units for the overseas customer and accepting the special order would require cutting back on 2,100 units for regular customers.
What would be minimum acceptable price for order?
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