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

question 9

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:
$$\begin{array} { | l | r | } \hline & \text { Per Unit } \\\hline \text { Sales price } & \$ 6 \\\hline \text { Direct material } & \$ 2.30 \\\hline \text { Direct labor } & \$ 0.87 \\\hline \begin{array} { l } \text { Variable } \\\text { overhead }\end{array} & \$ 0.91 \\\hline \text { Fixed overhead } & \$ 0.70 \\\hline\end{array}$$
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?

Distinguish between various economic systems based on their institutional arrangements and coordinating mechanisms.

Explain the significance of property rights in promoting economic transactions and innovation.

Identify the economic roles of profits and losses in resource reallocation and market responses.

Understand the benefits and limitations of barter and the importance of money in facilitating trade and specialization.

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Definitions:

Setup Times

The duration required to prepare or configure equipment or processes before starting a task or production.

Material Handling

Handling, protecting, storing, and controlling materials and merchandise through the phases of manufacturing, storage in warehouses, distribution to consumers, and their ultimate disposal.

Setup Cost

The expenses incurred to get equipment ready to process a different batch of goods.

Production Cycle

The series of steps involved in producing a good or service, from initial raw materials to the finished product.