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Price per Unit for Special Order

Chechny business has received one time special order for 1,000 units. Producing the order will have no effect on production and sales of other units. They buyer's name will be stamped on each unit, at a costs of $2,000. Normal cost data, excluding stamping, as follows:

Direct materials..............................$10 per unit
Direct labor.....................................16 per unit
Variable overhead...........................12 per unit
Allocated fixed overhead..................12 per unit
Allocated fixed selling expense..........8 per unit

What selling price per unit will this business require to earn $3,000 on the order?

Explain and show calculations of what selling price per unit will this company require to earn $3,000 on the order.

Solution Preview

The order will have no effect on other units would imply that there is excess capacity. Under this condition, the incremental costs for the order would be the ...

Solution Summary

The solution explains how to calculate the price per unit for special order using a formula.

$2.19