$($L$.$O $4-1,2)4-35.$ Pricing Decisions

Mother's Bottlers, Inc., is a small bottling company that bottles and sells cold teas for $$5$ per

unit. The cost of each unit follows:

One of Mother's regular customers asked the company to fill a special order of $2,000$ units

at a selling price of $$3\mathrm{.}50$ per unit. Mother's can fill the order using existing capacity without

affecting total fixed costs for the month. However, Mother's manager was concerned about

selling at a price below the $$4\mathrm{.}00$ cost per unit and has asked for your advice.

Required

a$.$ Prepare a schedule to show the impact of providing the special order of $2,000$ units on

Mother's profits in addition to the regular production and sales of $20,000$ units per month.

b$.$ Based solely on the data given, what is the lowest price per unit at which the bottled teas

could be sold for the special order without reducing Mother's profits?

c$.$ What other factors might Mother's managers want to consider in setting a price for the

special order?