Burns Industries currently manufactures and sells 15,000 power saws per month, although it has the capacity...

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Burns Industries currently manufactures and sells 15,000 power saws per month, although it has the capacity to produce 30,000 units per month. At the 15,000-unit-per-month level of production, the per-unit cost is $54, consisting of $34 in variable costs and $20 in fixed costs. Burns sells its saws to retail stores for $75 each. Allen Distributors has offered to purchase 4,500 saws per month at a reduced price. Burns can manufacture these additional units with no change in its present level of fixed manufacturing costs. Using an incremental analysis approach, Burns should consider accepting this special order only if the price per unit offered by Allen is at least: a. $54. b. $34. c. $20. d. $75. Burns Industries currently manufactures and sells 15,000 power saws per month, although it has the capacity to produce 30,000 units per month. At the 15,000-unit-per-month level of production, the per-unit cost is $54, consisting of $34 in variable costs and $20 in fixed costs. Burns sells its saws to retail stores for $75 each. Allen Distributors has offered to purchase 4,500 saws per month at a reduced price. Burns can manufacture these additional units with no change in its present level of fixed manufacturing costs. Using an incremental analysis approach, Burns should consider accepting this special order only if the price per unit offered by Allen is at least: a. $54. b. $34. c. $20. d. $75.

Answer rating: 100% (QA)

Option b 34 In the given case burns industries has excess cap... View the full answer