so Company manufactures dolls that are sold to various distributors. The company

Question

so Company manufactures dolls that are sold to various distributors. The company produces at meet peak demand; the manufacturing facility operates at 80% of 21 ) Paradiso full capacity for six months each year to capaity for the other six months of the year. The company has provided the following data for the year No. of units produced and sold 400,000units Sales price Variable manufacturing costs Fixed manufacturing costs Variable selling and administrative costs Fixed selling and administrative costs $40per unit $20per unit 1,000,000per year S5per unit 5500,000per year Paradiso receives an offer to produce 6,000 olls for a special event. This is a one-time opportunity during a period when the company has excess capacity. What is the minimum sales price the company should accept for the order? A) $15 B) $40 C) $20 D) 525

Explanation / Answer

Min. Sales Price = Variable manufacturing costs + Variable Selling & Administration costs (20+5)

Theref minimum sales price the company should accept the order is $25 (D)

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