a. Assume that there would be no variable sales commission on this special order. Determine the lowest unit price that Atlas can bid without reducing its current level of operating income. b. Assume the company desires a 38 percent contribution margin ratio from this sale and that a special sales commission of 4 percent of the bid price will be applied to the order instead of its normal $4 variable sales commission. Determine the bid price per unit given these unique circumstances. C. Assume the product fixed costs are $180,000. How many units need to be sold to attain a profit of $249,000?

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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3. CVP:
Atlas Corp, has been asked to submit a bid on supplying underwater masks to Pandora. The
company's current cost structure per mask is as follows:
DM
DL
var. MOH
var. SGA
$9.00
$8.00
$7.50
$4.00
a. Assume that there would be no variable sales commission on this special order. Determine the
lowest unit price that Atlas can bid without reducing its current level of operating income.
b. Assume the company desires a 38 percent contribution margin ratio from this sale and that a
special sales commission of 4 percent of the bid price will be applied to the order instead of its
normal $4 variable sales commission. Determine the bid price per unit given these unique
circumstances.
c. Assume the product fixed costs are $180,000. How many units need to be sold to attain a
profit of $249,000?
Transcribed Image Text:3. CVP: Atlas Corp, has been asked to submit a bid on supplying underwater masks to Pandora. The company's current cost structure per mask is as follows: DM DL var. MOH var. SGA $9.00 $8.00 $7.50 $4.00 a. Assume that there would be no variable sales commission on this special order. Determine the lowest unit price that Atlas can bid without reducing its current level of operating income. b. Assume the company desires a 38 percent contribution margin ratio from this sale and that a special sales commission of 4 percent of the bid price will be applied to the order instead of its normal $4 variable sales commission. Determine the bid price per unit given these unique circumstances. c. Assume the product fixed costs are $180,000. How many units need to be sold to attain a profit of $249,000?
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