Haskins Company Is Currently Operating at a Loss of $15,000

question 97

Multiple Choice

Haskins Company is currently operating at a loss of $15,000.The sales manager has received a special order for 5,000 units of product,which normally sells for $35 per unit.Costs associated with the product are: direct material,$6; direct labor,$10; variable overhead,$3; applied fixed overhead,$4; and variable selling expenses,$2.The special order would allow the use of a slightly lower grade of direct material,thereby lowering the price per unit by $1.50 and selling expenses would be decreased by $1.If Haskins wants this special order to increase the total net income for the firm to $10,000,what sales price must be quoted for each of the 5,000 units?

• A)$23.50
• B)$24.50
• C)$27.50
• D)$34.00

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Definitions:

Technology Used

The application of scientific knowledge, tools, and equipment to improve products, processes, and services.

Number of Firms

Refers to the total quantity of individual businesses operating within a particular industry or market.

Price of Inputs

The cost of the resources used in the production of goods and services.

Price of Labor

The compensation, including wages and benefits, that employers provide to workers in exchange for their labor services.