Reggie Ltd. manufactures a single product with the following unit costs per 1,000 units: 

Direct materials £2,400; 

Direct labor £960; 

Factory overhead (30% variable) £1,800; 

Selling expenses (50% variable) £900; 

Administrative expenses (10% variable) £840; 

Total per unit £6,900. 

Reggie Ltd. was recently approached by a company to buy 100 units for £5,100 each. The models currently sell to dealers for £7,800. Reggie Ltd.'s capacity is sufficient to produce the additional 100 units. No additional selling costs would be incurred on the special order. 

If Reggie Ltd. wants to increase its profit by £20,000 on the special order, what is the minimum price it must charge per unit?

Answer rating: 100% (QA)

To determine the minimum price Reggie Ltd must charge per unit to increase its profit by 20000 on th... View the full answer