Salisbury Corporation has been producing and selling 30,000 caps a year. The company has the capacity to produce 40,000 caps with its present facilities. The following information is also available: Selling price per unit: Variable costs per unit: Manufacturing Selling and Administrative Fixed costs in total: Manufacturing Selling and Administrative $35 B. $23.50 C. $20.00 D. $29.50 E. None of the above $14 $6 $128,000 $56,000 Gilbert Company has contacted Salisbury about purchasing 12,000 units at $24 each. A new customer who wants 20,000 units (all or nothing) right now also contacted Salisbury. Salisbury has to reduce its existing sales when selling either to Gilbert or to the new customer. For the new customer, variable selling and administrative costs would not be incurred. Unfortunately, Salisbury cannot sell both to Gilbert Company and the new customer. What is Salisbury's minimum price to accept the offer from the new customer (instead of Gilbert Company)? A. $22.40

Salisbury Corporation has been producing and selling 30,000 caps a year. The company has the capacity to produce 40,000 caps with its present facilities. The following information is also available: Selling price per unit: Variable costs per unit: Manufacturing Selling and Administrative Fixed costs in total: Manufacturing Selling and Administrative $35 B. $23.50 C. $20.00 D. $29.50 E. None of the above $14 $6 $128,000 $56,000 Gilbert Company has contacted Salisbury about purchasing 12,000 units at $24 each. A new customer who wants 20,000 units (all or nothing) right now also contacted Salisbury. Salisbury has to reduce its existing sales when selling either to Gilbert or to the new customer. For the new customer, variable selling and administrative costs would not be incurred. Unfortunately, Salisbury cannot sell both to Gilbert Company and the new customer. What is Salisbury's minimum price to accept the offer from the new customer (instead of Gilbert Company)? A. $22.40

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

Salisbury Corporation has been producing and selling 30,000 caps a year. The company has the
capacity to produce 40,000 caps with its present facilities. The following information is also available:
Selling price per unit:
Variable costs per unit:
Manufacturing
Selling and Administrative
Fixed costs in total:
Manufacturing
Selling and Administrative
$35
B. $23.50
C. $20.00
D. $29.50
E. None of the above
$14
$6
$128,000
$56,000
Gilbert Company has contacted Salisbury about purchasing 12,000 units at $24 each. A new customer
who wants 20,000 units (all or nothing) right now also contacted Salisbury. Salisbury has to reduce its
existing sales when selling either to Gilbert or to the new customer. For the new customer, variable
selling and administrative costs would not be incurred. Unfortunately, Salisbury cannot sell both to
Gilbert Company and the new customer. What is Salisbury's minimum price to accept the offer from
the new customer (instead of Gilbert Company)?
A. $22.40

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