sony television makes and sells portable television set . Each television regula

Question

sony television makes and sells portable television set . Each television regularly sells for $200. The following cost data per television are based on full capacity of 12000 televisions produced each period.

Direct materials $100

Direct labor $75

Man Overhead $65

has received a special order for a sale of 2,500 televisions to an overseas customer. The only selling costs that would be incurred on this order would be $10 per television for shipping. Farnsworth is now selling 7,200 televisions through regular distributors each period. What should be the minimum selling price per television in negotiating a price for this special order?

Explanation / Answer

Man Overhead is assumed to eb Fixed Cost Calculation of the Maximum Selling Price Full Capacity 12000 Televisions Minimum Selling price Direct materials 100 Direct labor 75 Shipping Cost 10 Minimum Selling price 185 The minimum selling price should be $ 185 as the sony television has excess capacity and fixed cost will be avoided

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