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Special Order Break Even Point

A company regularly sells TVs for $200. The following data per TV is based on full capacity of 12,00 TVs produced each period:

Direct materials: $75
Direct labor: $55
Manufacturing overhead (76% variable and 25% unavoidable fixed): $48

The company received an order for a sale of 2,500 TVs to an overseas customer. The only selling cost that would be incurred on the order is $10 per TV for shipping. The company is now selling 72,00 TVs through regular distributors each period. What should be the minimum selling price per TV in negotiating for this special order?

Solution Preview

A special order is a one-time order that is not considered part of the company's normal ongoing business. When analyzing a special order, only the incremental costs and benefits are relevant.

Thus here we will consider all the variable costs and ...

Solution Summary

A company regularly sells TVs for $200. The following data per TV is based on full capacity of 12,00 TVs produced each period.

$2.19