Farnsworth Television makes and sells portable television sets. Each television
ID: 2536302 • Letter: F
Question
Farnsworth Television makes and sells portable television sets. Each television regularly sells for $270. The following cost data per television are based on a full capacity of 15,500 televisions produced each period:
A special order has been received by Farnsworth for a sale of 2,600 televisions to an overseas customer. The only selling costs that would be incurred on this order would be $11 per television for shipping. Farnsworth is now selling 7,600 televisions through regular distributors each period. What should be the minimum selling price per television in negotiating a price for this special order?
Farnsworth Television makes and sells portable television sets. Each television regularly sells for $270. The following cost data per television are based on a full capacity of 15,500 televisions produced each period:
Explanation / Answer
The selling price should at least cover the relevant cost.
Direct materials $60 Direct labor $40 Manufacturing overhead (70% of $40) $28 Shipping cost $11 Relevant cost $139Related Questions
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