A Company Is Currently Operating at 60% Capacity Producing 10,000

question 92

Essay

A company is currently operating at 60% capacity producing 10,000 units. Cost information relating to this current production is shown in the following table:
$$\begin{array} { | l | r | } \hline & \text { Per Unit } \\\hline \text { Sales price } & \$ 21.00 \\\hline \text { Direct material } & \$ 6.00 \\\hline \text { Direct labor } & \$ 4.12 \\\hline \text { Variable overhead } & \$ 2.23 \\\hline \text { Fixed overhead } & \$ 0.80 \\\hline\end{array}$$ The company has been approached by a customer with a request for a special order for 5,000 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:

Goniometry

The measurement of angles, especially used in assessing joint flexibility in physical therapy.

Radiopaque

Describes substances that do not allow the passage of X-rays or other forms of radiation, thereby appearing white or light on radiographic images.

Ankylosis

The abnormal stiffening and immobility of a joint due to fusion of the bones.

Acetabulum

The socket in the pelvic bone that receives the head of the femur, forming the hip joint.