For next quarter you have been asked to supply a special order of your cereal. T
ID: 2589769 • Letter: F
Question
For next quarter you have been asked to supply a special order of your cereal. The non-profit organization requesting this order would like a custom box (packaging) that will cost $0.35 instead of the normal $0.20 per box. The request is for 5,000 boxes of cereal. Based on your projections you have the capacity for this order. What is the minimum price per unit and total price you would be willing to accept on this order? (You cannot afford to take this offer at a loss, but you are fine with accepting it at cost).
Explanation / Answer
The minimum price per unit would be $0.35 and total price would be $1,750(0.35*5000) to accept this order.
Since we have enough capacity to produce this order, thus we don't need to sacrifice normal sales, neither we have incur onetime costs on increasing of capacity, thus $0.35 per unit variable cost is minimum what we need to not incur a loss on the order.
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