A company is considering launching a new product, this product is called X. This product X includes a material called Alpha. This material is also included in today's main product Y. The following data have been produced as the basis for the decision:

Direct material for Y: £40/piece
Direct pay for Y: 18/piece
Overhead charge for Y: 45/piece
Self-cost (sum) for: 103/piece

Direct material for X: £250/piece
Direct pay for X: 350/piece
Overhead charge for X: 630/piece
Self-cost (sum) for X: 1230/piece

Of the direct material cost of Y, the Alpha is responsible for £10. The corresponding cost for X is £60. The sale price of Y is £120 and the company is currently selling everything you can manufacture. For the foreseeable future, it is not possible to get more of the Alpha material.

What is the lowest acceptable price for X under these conditions?

Answer rating: 100% (QA)

To determine the lowest acceptable price for product X we need to consider its cost structure and th... View the full answer