A special order offering to buy 121,000 units has been received from a foreign d

Question

A special order offering to buy 121,000 units has been received from a foreign distributor. The only selling costs that would be incurred on this order would be $18.10 per unit for shipping. The company has sufficient idle capacity to manufacture the additional units. Two-thirds of the manufacturing overhead is fixed and would not be affected by this order. In negotiating a price for the special order, the minimum acceptable selling price per unit should be: (Round your answer to two decimal places.)

$96.50.

$84.40.

$90.50.

$108.90.

Marion Company sells its product for $127 per unit. The company’s unit product cost based on the full capacity of 310,000 units is as follows:

Explanation / Answer

Direct materials 24.1 Direct labor 30.1 Variable Manufacturing overhead 12.1 =36.3/3 Selling costs 18.1 Minimum acceptable price 84.4 Option 2 is correct

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