Answer:
The minimum price must be able to cover the variable costs, therefore $142 is the absolute minimum.
Step-by-step explanation:
Giving the following information:
The following cost data per television are based on full capacity of 20,000 televisions produced each period:
Direct materials $ 65
Direct labor $ 50
Manufacturing overhead (70% variable, 30% unavoidable fixed) $ 60
A special order has been received by Farnsworth for a sale of 3,500 televisions to an overseas customer. The only selling costs that would be incurred on this order would be $14 per television for shipping.
Because it is a special offer with an overseas consumer and there is unused capacity, we will not consider the fixed costs to make a better offer.
Unitary cost= 65 + 20 + 14 + (60*0.70)= $141
The minimum price must be able to cover the variable costs, therefore $142 is the absolute minimum.