ne-time-only order for 500 units of component K65 The company has received a spe

Question

ne-time-only order for 500 units of component K65 The company has received a special, co and the total fixed There would be no variable selling expense on this special order manufacturing overhead and fixed selling and administrative expenses of the company would not be affected by the order. However, assume that Kava has no excess capacity and this special order would require 10 minutes of the constraining resource, which could be usecd instead to produce products with a total contribution margin of $11,000. What is the minimum price per unit on the special order below which the company should not go? a. $60 b. $81 c. $100 d. $22

Explanation / Answer

Total contribution margin = $11,000

Number of units in special order = 500

Minimum price per special order = 11000/500   = $22

Answer - d. $22

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