Inc. is a manufacturing company. It has received a special order for 8,000 units of its product TK-15. The normal selling price of one unit of TK-15 is$52 and its unit product cost is $20 as shown below:Direct materials$8.00Direct labor$2.00Manufacturing overhead$10.00Unit product cost$20.00The company's manufacturing overhead cost is mostly fixed. Only 30% of manufacturing overhead varies with the number of units of TK-15 produced. Thespecial order will require customizing the TK-15s for an additional direct materials cost of $6 per unit and an additional direct labor cost of $5 per unit. IfSOR-240 accepts the special order, the company will have to lease special equipment at a cost of $80,000 to do the customization. The company hassufficient excess capacity, and the special order would not affect the company's regular production and sales.What is the minimum (i.e., the break-even) sales price that the company should charge per unit of the customized TK-15 for this special order?

Minimum sales price that is break even is where there is no profit or loss. Minimum sale price is…

$2.00 $10.00 $20.00 overhead cost is mostly fixed. Only 30% of manufacturing overhe omizing the TK-15s for an additional direct materials cost of $6 pe order, the company will have to lease special equipment at a cost the special order would not affect the company's regular produc

$2.00 $10.00 $20.00 overhead cost is mostly fixed. Only 30% of manufacturing overhe omizing the TK-15s for an additional direct materials cost of $6 pe order, the company will have to lease special equipment at a cost the special order would not affect the company's regular produc

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

Inc. is a manufacturing company. It has received a special order for 8,000 units of its product TK-15. The normal selling price of one unit of TK-15 is
$52 and its unit product cost is $20 as shown below:
Direct materials
$8.00
Direct labor
$2.00
Manufacturing overhead
$10.00
Unit product cost
$20.00
The company's manufacturing overhead cost is mostly fixed. Only 30% of manufacturing overhead varies with the number of units of TK-15 produced. The
special order will require customizing the TK-15s for an additional direct materials cost of $6 per unit and an additional direct labor cost of $5 per unit. If
SOR-240 accepts the special order, the company will have to lease special equipment at a cost of $80,000 to do the customization. The company has
sufficient excess capacity, and the special order would not affect the company's regular production and sales.
What is the minimum (i.e., the break-even) sales price that the company should charge per unit of the customized TK-15 for this special order?

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uod cz 1.The cost to produce one unit of the product is: Material $ 13.00 Labor $8.00 Variable cost $7.00 Fixed expenses $ 18.00 Total fixed expenses: $ 500,000 The company's normal capacity is 100,000 units. The figures given above are for 80,000 units. The company has received a special offer for 20,000 units for a price of $ 36 per unit from a foreign customer. Advice the manufacturer on whether the order should be accepted or not. For the toolbar, press ALT+F10 (PC) or ALT+FN+F10 (Mac). 3 (12pt) Qi:公 Arial vE - E T TTTT Paragraph v T T S T HTML CSS O fr Mashups