I wanted to check on the formula for minimum acceptable price in terms of special orders. Here is some data that I made up: Normal selling price = $100 variable costs = $50 fixed costs = $20 The company's capacity is 5000 units. They currently produce 4500 units. The special order is for 1000 units. There are no additional fixed costs or additional selling or administrative costs. I am looking for the minimum acceptable price. I think it's (variable costs + fixed cost increase + opportunity cost per unit)/ number of units in order. Thanks!
I wanted to check on the formula for minimum acceptable price in terms of special orders. Here is some data that I made up: Normal selling price = $100 variable costs = $50 fixed costs = $20 The company's capacity is 5000 units. They currently produce 4500 units. The special order is for 1000 units. There are no additional fixed costs or additional selling or administrative costs. I am looking for the minimum acceptable price. I think it's (variable costs + fixed cost increase + opportunity cost per unit)/ number of units in order. Thanks!
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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I wanted to check on the formula for minimum acceptable price in terms of special orders. Here is some data that I made up:
Normal selling price = $100
variable costs = $50
fixed costs = $20
The company's capacity is 5000 units. They currently produce 4500 units. The special order is for 1000 units. There are no additional fixed costs or additional selling or administrative costs.
I am looking for the minimum acceptable price. I think it's (variable costs + fixed cost increase + opportunity cost per unit)/ number of units in order.
Thanks!
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