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?

---

Definitions:

Containment Doctrine

A foreign policy strategy adopted by the United States during the Cold War aiming to prevent the spread of communism by providing political, military, or economic assistance to threatened nations.

Marshall Plan

A U.S.-initiated program aimed at the economic recovery of war-torn Europe post World War II, through significant financial aid and rebuilding efforts.

Western Europe

A region comprising the western part of Europe, known for its advanced economies, democratic institutions, and historical influence on global affairs.

Economic Integration

The unification of economic policies between different states through the partial or full abolition of tariff and non-tariff restrictions on trade taking place among them.