Greenland Sports, Inc. has been asked to submit a bid to the National Hockey Lea

Question

Greenland Sports, Inc. has been asked to submit a bid to the National Hockey League on supplying 1,000 pairs of professional quality skates. The cost per pair of skates has been determined as follows:

Direct materials $80

Direct Labor $60

Variable Overhead $30

Fixed overhead (allocated) $20

Other non-manufacturing costs associated with each pair of skates are:

Variable selling cost (commission) $25

Fixed selling and administrative cost $10

Assume the commission on the sale of skates to the National Hockey League would be reduced to $15 per pair and that available production capacity exists to produce the 1,000 pairs of skates. The lowest price the firm can bid is some price greater than:

A. $185
B. $190
C. $215
D. $225

Explanation / Answer

A. $185

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