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What is the minimum sales price

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Question - SOR-242 lnc, is a manufacturing company, it has received a special order for 6,000 units of its product TK-15. The normal selling price of one unit of TK-15 is $57 and its unit product cost is $20 as shown below:

Direct materials $8.00

Direct labor $2.00

Manufacturing overhead $10.00

Unit product cost $20.00

The company's manufacturing overhead cost is mostly fixed, Only 30% of manufacturing overhead varies with the number of units of TK-15 produced, The special order will require customizing the TK-15s for an additional direct materials cost of $4 per unit and an additional direct labor cost of $5 per unit. If SOR-242 accepts the special order, the company will have to lease special equipment at a cost of $60,000 to do the customization, The company has sufficient excess capacity, and the special order would not affect the company's regular production and sales.

Required - What is the minimum (i,e,, the break-even) sales price that the company should charge per unit of the customized TK-15 for this special order?

Reference no: EM133184774

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