MC Qu. 37 The Mighty Music Company produces and sells.. The Mighty Music Company
ID: 2587404 • Letter: M
Question
MC Qu. 37 The Mighty Music Company produces and sells.. The Mighty Music Company produces and selis a desktop speaoker for $100 The company has the capacity to produce 50000 speakers each period At capacity the costs assigned to each unt are as olows Unt level costs Product level costs Facility level costs $45. $15 The company has received a special order fo ,500 speakers i this order is accepted, the company will have to spend $15.000 on edditional costs Assuming thet no soles to regular customens if the order is accepted, at what seling price will the company be idfferen between accepting and rejecing the specal order? will be los O $95 O $45 O $75 O 560Explanation / Answer
The price at which the company will be indifferent in accepting and rejecting the special order will be:
500 units of speakers * $45 = $22,500
The productive level and Facility costs does not change with the accept of special order or not.
Let the selling price be X where the company be indifferent
Hence, the price Equation will be
nil = 500 units * X - $22,500 - $15,000
500 units * X = - $37,500
X = $75
Therefore At the selling price $ 75 the product price will be indifferent
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