The president of Asian Wholesalers would like to offer special sale prices to th

Question

The president of Asian Wholesalers would like to offer special sale prices to the firm's best customers under the following terms:
1. The prices will apply only to units purchased in excess of the quantity normally purchased by a customer.
2. The units purchased must be paid for in cash at the time of sale.
3. The total quantity sold under these terms cannot exceed the excess capacity of the firm.
4. The net profit of the firm should not be affected.
5. The prices will be in effect for one week only.
Given these conditions, the special sale price should be set equal to the:
Answer

average variable cost of materials only.

average cost of all variable inputs.

sensitivity value of the variable costs.

marginal cost of materials only.

marginal cost of all variable inputs.

Explanation / Answer

marginal cost of all variable inputs.

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