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What is the minimum amount that the firm should be willing

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Reference no: EM132502617

Consider the following information, prepared based on a monthly capacity of 200,000 units:

Category

Cost per Unit

Variable manufacturing costs           $33

Fixed manufacturing costs               $12

Variable selling costs                      $10

Fixed selling costs                           $8

  • Capacity cannot be added in the short run and the firm currently sells the product for $75 per unit.

Question 1: The company is currently producing 180,000 units per month. A potential customer has contacted the firm and offered to purchase 20,000 units this month only. Since the potential customer approached the firm, there will be no variable selling costs incurred on this order. What is the minimum amount that the firm should be willing to accept for this order?

Reference no: EM132502617

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