Asked by SamanthaRey Colón on May 13, 2024

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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:
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:    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? 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?

Special Order

A special order refers to a one-time order that is not part of the regular, ongoing business operations and usually requires consideration of additional costs and pricing.

Capacity

The maximum level of output that a company can sustain to make a product or provide a service.

Sales Price

The amount of money charged for a product or service, which can vary based on demand, market conditions, and production costs.

  • Acquire knowledge on the methodology of decision-making concerning special orders and pricing policies.
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Michelle SanchezMay 16, 2024
Final Answer :
10,000/.6 - 10,000 = 6,666 unit remaining capacity
$6 + $4.12 + $2.23 = $12.35 incremental costs
Any sales price that exceeds the $12.35 incremental costs will increase current profits.