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What is the minimum unit price

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Question - Neal Manufacturing Inc. has been approached by a customer who wants to place a one-time order for a component similar to one that they make for another customer. Existing sales will not be affected by acceptance of this order. The manufacturing costs and the targeted selling price for the component currently being made are below. The direct materials used in the new component for the new customer would cost $.50 more than those in the component currently being made. The variable selling expenses would be $1.25 per unit. What is the minimum unit price at which Neal Manufacturing would be willing to accept the special order?

Direct materials 2.70

Direct labor 4.40

Variable manufacturing overhead (75% of direct labor cost) 3.30

Fixed manufacturing overhead (150% of direct labor cost) 6.60

Total manufacturing cost 17.00

Markup (55% of full manufacturing cost) 9.35

Targeted selling price 26.35

Reference no: EM132480289

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