ustavo Fring approached Walt & Jessie Pharmaceutical Co. to buy 50 pounds of product for $50,000 a pound. Regula
Gustavo Fring approached Walt & Jessie Pharmaceutical Co. to buy 50 pounds of product for $50,000 a pound. Regular customers are charged $84,000 for a pound of product. Walt and Jessie Pharmaceutical Co. has the capacity to make 1000 pounds of product per month. The following costs are associated with the company's normal monthly production of the sale of 970 pounds of product:
| Direct Material per Pound of Product | $9,000 |
| Direct Labor per Pound of Product | $2,000 |
| Variable MOH per Pound of Product | $3,000 |
| Fixed MOH per Pound of Product | $3,000 |
What is the minimum price Walt and Jessie Pharmaceutical Co. would be willing to accept per pound of product for the order?
Round your answer to the nearest dollar.
Hint: You can solve this problem using the formula for minimum transfer price. Transfer price >= incremental variable costs per unit + (Sacrificed regular contribution margin/ # units transferred)
Minimum price = incremental variable costs per unit + ((# units sacrificed x (regular price - regular variable costs))/# units in order)
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