Reference no: EM132542483

Question -

(a) Martin Company incurred the following costs for 70,000 units of produced and sold:

Variable costs $420,000

Fixed costs 392,000

Martin has received a special order from a foreign company for 3,000 units. There is sufficient capacity (at the current fixed costs of $392,000) to fill the order without jeopardizing regular sales of 70,000 units. Filling the order will require spending an additional $6,300 for shipping.

If Martin wants to break even on the special order from the foreign company, what should the unit sales price be?

(b) If Martin wants to earn $6,000 on the order, what should the unit price be? Explain how you arrive at the answer?

(c) If Martin Company anticipates that regular sales will be affected by the acceptance of a special order. Should the company accept or reject the special order and explain with reference to each option?