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:

Low-Interest Loans

Loans offered with a lower than average interest rate, making them more affordable for the borrower.

Subsidy

A financial contribution granted by the government to support or promote economic activities.

Direct Assistance

Support or aid provided directly to individuals, organizations, or countries, often in the form of resources, financing, or services.

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Financial incentives or discounts in taxation provided by the government to encourage certain activities or investments.