Peach has received a special order for 10,000 units of its product. The product

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Peach has received a special order for 10,000 units of its product. The product normally sells for $20. And has the following manufacturing cost....

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Home ? ezto.mheducation.c i CORD I ..E ? Most Visitedmy.utrgy.eduALGEBRA Login t Search every 16. Peach has recelved a special order for 10,000 units of Its product. The product normelly sels for $20 and has the followinig manufacturing costs: $ 6 Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead 6 Unit cost Assume that Peach has sufficlent capacity to fill the order. What price should Peach charge to make a $10,000 Incremental profit? O $15 o $20 O $12 o $17 Macro II Sc2 1080 30 29... Chapter 10 test bank o... Study Notes

Explanation / Answer

Ans. Option 3rd $12 *Calculation: Incremental selling price = Incremental revenue / sales units 120000 / 10000 12 *Incremental revenue = Incremental cost + Incremental profit 110000 + 10000 120000 *Calculation of incremental cost: Sales units * Total variable cost per unit 10000 * (6+3+2) 110000 *Increment in sales does not affect to the fixed cost so it is not included in incremental cost, as fixed costs always remain constant.

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