The Sweet Treats During the other six mont Softhe year, the Nufactnng facity ope

Question

The Sweet Treats During the other six mont Softhe year, the Nufactnng facity operates at 75% of ITI Click the loon to view the data.) Company manufactures candy that is sold to food distributors. The company produces at ful capacity for capacty The Sweet Treats Orpany provses re towing daa sx months each year to meet peak demand during the "candy seasont trom Hailoween Phrough Valentine's Day he The Sweet Treats Company receives Company should accept for the order? Explain why an offer to produce 15000 cases of candy for a special event. This is a one-sme opportunity during a period when the company has excess capacity What is the minimum seling price The Sweet Treats is a one-ime opportunity The mnmum selting price that Sweet Treats Company shouid accept for the special oder is the ane not relevant because they will be incurred whether the order is accnpted or not, Cases of Gaies price Variable manufachuing coss Fixed manufactiuning costs Variable selling and administrative costs Fsed seling and edminisbative costs 2 000,000 case 29.00 per cane 6 700,000 per yeur 3.00 per case Prine Done Choose from any list or entor any number in the input fields and then continue to the next question

Explanation / Answer

The Sweet Treats Company receives an offer to produce 15000 cases during the period when it has excess capacity.

Therefore the fixed cost get irrelevant to decide the minimum selling price as they would be incurred even if the given offer is not received.

So the only cost relevant to decide the minimum selling price is the Variable Cost

Minimum Sellin Price = Variable Manufacturing Cost per case + Variable Selling & Administration Cost per case

=$ 7 + $ 3

= $ 10 per case

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