SOFT Micro Co SOFT Received a Special Order for 1,000 Units of Part

question 33

Essay

SOFT Micro Co., sells part #1973 for $240 per unit and the standard cost of producing each unit of part #1973 is determined as follows:
$\begin{array}{lrr} \text { Direct material (5 lbs. \( \times \$ 4 \) per lb.) } &\$20\\ \text { Direct labor (2hrs.@\$20 per hr.)} &40\\ \text { Overhead(2hrs.@\$70 per hr.} &\underline{140}\\ \text { Total } &\underline{\$200}\\\end{array}$

SOFT received a special order for 1,000 units of part #1973.The only additional cost to SOFT is a special packaging requirement that would cost $10 per unit.
(a.)If SOFT were currently able to sell all of its production of part #1973, what would be the minimum sales price that SOFT should consider for this special order?
(b.)Assume that SOFT has enough idle capacity to produce 1,000 units of part #1973 and that overhead is 20% variable.If SOFT wants to increase its operating profit by $110,000, what price per unit would SOFT charge for the special order?

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Definitions:

Indirect Method

An approach to assemble the cash flow statement by adjusting net income for fluctuations in balance sheet accounts to determine the cash flow originating from operations.

Operating Activities

The component of cash flow statement that reflects the cash generated or used by the core business operations.

Net Cash

The amount of cash available after accounting for cash inflows and outflows, indicating a company's liquidity.

Indirect Method

A method of reporting net cash flow from operating activities on the cash flow statement by adjusting net income for changes in the balance sheet accounts.