Hobbs Electronics Makes and Sells Portable DVD Players

question 64

Short Answer

Hobbs Electronics makes and sells portable DVD players. Each DVD player has a selling price of $100. The following cost data per DVD player is based on a capacity of 5,000 DVD players per period. Hobbs receives a special order for 100 DVD players. The only additional costs Hobbs will incur is $2 shipping charges per item. Hobbs has sufficient idle capacity to produce the additional DVD players. What is the minimum price Hobbs should charge per DVD player for the special order? a. $60
B) $59
C) $57
D) $55
E) $62

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Definitions:

Common Carrier

A business or service that is licensed to transport goods or passengers on a regular basis and is available to the public.

Bailee

The person who takes possession of a chattel in a bailment.

Foreseeable Harm

Damage or injury that a reasonable person should be able to predict or anticipate as a likely result of their actions or omissions in a given set of circumstances.

Gratuitous Bailment

A bailment relationship where the bailee agrees to hold goods without receiving any form of payment, purely out of goodwill.