Kanada Inc. currently produces a product with the following cost characteristics: Item Plant capacity Current product/sales...
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Kanada Inc. currently produces a product with the following cost characteristics: Item Plant capacity Current product/sales volume Selling price Variable cost-production Variable cost-selling and administrative Total fixed costs Amount 42,750 units 35,500 units $85 31.50 12.50 $929,000 A customer approaches Kanada Inc. for a special one-time order to purchase 10,250 units. 65% of current variable selling and administrative costs would be incurred with this order. Kanada Inc. will also have to purchase a special machine which will only be used on this order at a cost of $69,750. Assuming Kanada Inc. would purchase the machine, what is the minimum acceptable per unit price for this order? Kanada Inc. currently produces a product with the following cost characteristics: Item Plant capacity Current product/sales volume Selling price Variable cost-production Variable cost-selling and administrative Total fixed costs Amount 42,750 units 35,500 units $85 31.50 12.50 $929,000 A customer approaches Kanada Inc. for a special one-time order to purchase 10,250 units. 65% of current variable selling and administrative costs would be incurred with this order. Kanada Inc. will also have to purchase a special machine which will only be used on this order at a cost of $69,750. Assuming Kanada Inc. would purchase the machine, what is the minimum acceptable per unit price for this order?
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Related Book For
Horngrens Financial and Managerial Accounting
ISBN: 978-0133866292
5th edition
Authors: Tracie L. Nobles, Brenda L. Mattison, Ella Mae Matsumura
Posted Date:
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