SOFT Micro Co., sells part #1973 for $260 per unit and the standard cost of producing each
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Question:
SOFT Micro Co., sells part #1973 for $260 per unit and the standard cost of producing each unit is determined as follows:
Direct Material (5lbs x $4 per lb) | $20 |
Direct Labor (2hrs @ $40 per hr.) | 80 |
Overhead ($70 per DL hr.) | 140 |
Total | $240 |
SOFT received a special order for 1,000 units of part #1973. The only additional cost to SOFT is a special packaging requirement that would cost $10 per unit.
(a.) If SOFT were currently able to sell all of its production of part #1973, but has enough idle capacity for the special order what would be the minimum sales price that SOFT should consider for this special order? Assume the overhead is fixed and allocated to the product base on direct labor hours.
(b.) If SOFT wants to increase its operating profit by $110,000, what price per unit would SOFT charge for the special order?
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