Question

Bramble Corp. incurred the following costs for 58000 units: Variable costs$348000 Fixed costs392000 Bramble has received a special order from a foreign company for 2500 units. There is sufficient capacity to fill the order without jeopardizing regular sales. Filling the order will require spending an additional $3000 for shipping. If Bramble wants to earn $5000 on the order, what should the unit price be

Answer 1

Bramble Corp.

If Bramble wants to earn $5000 on the order, the unit price should be:

$9.20.

Step-by-step explanation:

a) Data and Calculations:

Normal Per Unit Special

Production Cost Order

Production capacity = 58,000 units 2,500 units

Variable costs $348,000 $6.00 $15,000 ($6 * 2,500)

Fixed costs 392,000 $6.76 0

Additional shipping $3,000

Total costs $740,000 $12.76 $18,000

Profit on special order 5,000

Total Sales revenue $23,000

Unit price for special order ($23,000/2,500) $9.20