Younes Inc. manufactures industrial components. One of its products, which is us

Question

Younes Inc. manufactures industrial components. One of its products, which is used in the construction of industrial air conditioners, is known as PO6. Data concerning this product are given below: Per Unit $220 $ 38 Selling price Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead Variable selling expense Fixed selling and administrative expense ? 16 $ 16 The above per unit data are based on annual production of 4,000 units of the component. Assume that direct labor is a variable cost The company has received a special, one-time-only order for 500 units of component PO6. There would be no variable selling expense on this special order and the total fixed manufacturing overhead and fixed selling and administrative expenses of the company would not be affected by the order. However, assume that Younes has no excess capacity and this special order would require 30 minutes of the constraining resource, which could be used instead to produce products with a total contribution margin of $10,000. What is the minimum price per unit below which the company should not accept the special order?

Explanation / Answer

minimum price per unit is $67 Dear Student Thank you for using Chegg Please find below the answer Statementshowing Computations Paticulars Amount Costs: Direct Materials = 500 * 38               19,000.00 Direct Labour = 500*1                     500.00 Variable manufacturing overhead = 500 * 8                 4,000.00 Loss of Contribution margin               10,000.00 Total costs               33,500.00 No of units                     500.00 Minimum price per unit = 33500/500                       67.00

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