Ideas Inc. uses the perpetual inventory method. Last month Archer Supply returne

Question

Ideas Inc. uses the perpetual inventory method. Last month

Archer Supply returned 1,000 frames to Ideas that were damaged in

transit. Data relating to the frames follows:

Sales Price $25

UNIT COSTS

Direct Materials 6

Direct Labor 3

Variable Manufacturing Overhead 1

Fixed Manufacturing Overhead 3

Variable Selling 2

PROFIT PER UNIT $10

Annie's Arts and Crafts Store is interested in acquiring the

returned merchandise. What is the lowest amount that Ideas Inc.

would sell the frames for assuming that all costs are within the

relevant range?

Explanation / Answer

Minimum price should be $15

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