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Galaxy Industries currently manufactures 15,000 components per year and sell these components in the open market $45 per unit. The manufacturing costs of the component were determined to be as follows: Units produced 15,000 units
Direct materials $150,000 Direct labor $240,000 Variable manufacturing overhead $90,000 Fixed manufacturing overhead $120,000
Note: Fixed manufacturing overhead are unavoidable.
Problem 1: If Galaxy's is currently producing 20,000 components (at full capacity), the minimum price/unit if Galaxy accept the special order is _____________
A. $30/unit
B. $32/unit
C. $40/unit
D. $45/unit
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