Response:
option c.
Clarification: an ongoing tracking system
Response:
Minimum selling price= $28
Reasoning:
Based on the information provided:
Direct materials $8
Direct labor $9
Variable manufacturing costs= $7
Landor has received a special order for 25,000 fans destined for an overseas buyer.
The only incurred selling cost for this order will be $4 per fan for shipping.
Given that this is a special request and there is available capacity, fixed costs will not be considered in this analysis.
The minimum price needed equals the total variable cost per unit. It is not a sustainable price long-term.
Variable cost per unit= 8 + 9 + 7 + 4= $28
[[TAG_55]]Minimum selling price= $28[[TAG_56]]
B is the correct response to that question.
