A Company Is Currently Operating at 65% Capacity Producing 12,000

question 137

Essay

A company is currently operating at 65% capacity producing 12,000 units.Cost information relating to this current production is shown in the following table:
$$\begin{array} { | l | r | } \hline & \text { Per Urit } \\\hline \text { Sales price } & \$ 6 \\\hline \text { Direct rraterial } & \$ 2.30 \\\hline \text { Direct labor } & \$ 0.87 \\\hline \begin{array} { l } \text { Variable } \\\text { overhead }\end{array} & \$ 0.91 \\\hline \text { Fixed overhead } & \$ 0.70 \\\hline\end{array}$$ The company has been approached by a customer with a request for a special order for 2,000 units.What is the minimum per unit sales price that management would accept for this order if the company wishes to increase current profits?

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Definitions:

Carboxylation

A chemical reaction that introduces a carboxyl group (-COOH) into a molecule.

Grignard Reagent

An organomagnesium compound used in organic chemistry for carbon-carbon bond formation, represented as RMgX where R is an alkyl or aryl group and X is a halogen.

Organic Halide

An organic compound containing one or more halogen atoms (fluorine, chlorine, bromine, or iodine) covalently bonded to carbon.

Carboxylation

The chemical process of adding a carboxyl group (-COOH) to a molecule, often important in biosynthetic pathways.