Turner Company sells product X for $21 per unit. Unit product costs are as follo

Question

Turner Company sells product X for $21 per unit. Unit product costs are as follows:
Direct materials $4
Direct labor 5
Manufacturing overhead 10
Total $19

A special order to purchase 20,000 units was recently received. There is enough capacity to fill the order and filling this order would not disrupt current operations. Warner Company would incur an additional $3 per unit for shipping costs. 40% of the manufacturing overhead costs are fixed and would be incurred no matter how many units are produced. In negotiating a price, the minimum acceptable selling price would be:
Answer


$19.

$18.

$22.

$16.

Explanation / Answer

The minimum acceptable selling price would be: Direct materials $4 Direct labor 5 Manufacturing overhead 6 Additional shipping cost $3 Total 418 Answer $18.

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