Question

A company manufactures bird feeders, which they normally sell for $30 each. The company compiles the following information relating to the production of the bird feeders:

Plant capacity: 280,000 feeders
Current production level: 200,000 feeders
Direct materials: $9/unit
Hourly labor: $6/unit
Variable overhead: $3/unit
Fixed overhead: $400,000

The company receives a request from a large buyer to purchase. What is the missing information needed to calculate the total revenue from the sale?

a) The quantity of bird feeders ordered by the large buyer
b) The total fixed costs
c) The total variable costs
d) The selling price per bird feeder to the large buyer

Answer 1

To calculate the total revenue from the sale to the large buyer, we need to know the quantity of bird feeders ordered by the buyer.

Step-by-step explanation:

To calculate the total revenue from the sale to the large buyer, we need to know the quantity of bird feeders ordered by the buyer (option a). Total revenue can be calculated by multiplying the selling price per bird feeder to the large buyer by the quantity of bird feeders ordered.