Smithson Company produces and sells one type of teapot. The company normally produces and sells 10.000...

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Smithson Company produces and sells one type of teapot. The company normally produces and sells 10.000 teapots each year at a selling price of $120 per unit. The company's unit costs at this level of activity are given below: Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead. Variable selling expenses Fixed selling expenses Total cost per unit $18 15 7 12 ($120,000 total) 15 6 ($60,000 total) $73. Assume that Smithson Company has sufficient capacity to produce 10,000 teapots each year. A customer in a foreign market wants to purchase 2,000 teapots. • If Smithson accepts this order, it will have to pay import duties on the teapots of $5 per unit and an additional $4,000 for permits and licenses. The only selling costs that would be associated with the order would be $3 per unit shipping cost. What is the break-even price per unit on this order? Smithson Company produces and sells one type of teapot. The company normally produces and sells 10.000 teapots each year at a selling price of $120 per unit. The company's unit costs at this level of activity are given below: Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead. Variable selling expenses Fixed selling expenses Total cost per unit $18 15 7 12 ($120,000 total) 15 6 ($60,000 total) $73. Assume that Smithson Company has sufficient capacity to produce 10,000 teapots each year. A customer in a foreign market wants to purchase 2,000 teapots. • If Smithson accepts this order, it will have to pay import duties on the teapots of $5 per unit and an additional $4,000 for permits and licenses. The only selling costs that would be associated with the order would be $3 per unit shipping cost. What is the break-even price per unit on this order?

Answer rating: 100% (QA)

To calculate the breakeven price per unit on this order we need to consider the additional costs ass... View the full answer