Marion Company sells its product for $131 per unit. The company\'s unit product

Question

Marion Company sells its product for $131 per unit. The company's unit product cost based on the full capacity of 350,000 units is as follows: Direct materials Direct labor Manufacturing overhead $24.50 30.50 37.50 Unit product cost $92.50 A special order offering to buy 125,000 units has been received from a foreign distributor. The only selling costs that would be incurred on this order would be $18.50 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.) O $86.00 O $92.50 O $98.50. O $112.50

Explanation / Answer

Correct option is $86

Explanation:

Variable expenses are:

=Direct material-directblabour + variable manufacturing overhead +shipping cost

=$24.50+$3050+(37.50/3)+$18.50

=$86 per unit

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