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Question - A company normally sells a product for $12 per unit. The plant capacity is 100,000 units per month, and current production is 75,000 units per month. Current costs are as follows:
Per unit
Total at 75,000 units
Direct materials
$4
$300,000
Direct labor
3
225,000
Fixed plant facility cost
2
150,000
Shipping costs
1
75,000
The company received a one-time special order for 10,000 units, which would be shipped in bulk to the buyer at a cost of $5,000 (10,000 times $0.50). What amount is the minimum selling price per unit that the company should accept for the special order?
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