Landor Appliance Corporation makes and sells electric fans. Each fan regularly sells for $47. The following cost data pe
Posted: Thu May 19, 2022 1:39 pm
Landor Appliance Corporation makes and sells electric fans. Each
fan regularly sells for $47. The following cost data per fan is
based on a full capacity of 140,000 fans produced each period.
Direct materials
$7
Direct labor
$9
Manufacturing overhead (50% variable and 50% unavoidable
fixed)
$10
A special order has been received by Landor for a sale of 15,000
fans to an overseas customer. The only selling costs that would be
incurred on this order would be $3 per fan for shipping. Landor is
now selling 125,000 fans through regular channels each period.
Assume that direct labor is an avoidable cost in this decision.
What should Landor use as a minimum selling price per fan in
negotiating a price for this special order?
fan regularly sells for $47. The following cost data per fan is
based on a full capacity of 140,000 fans produced each period.
Direct materials
$7
Direct labor
$9
Manufacturing overhead (50% variable and 50% unavoidable
fixed)
$10
A special order has been received by Landor for a sale of 15,000
fans to an overseas customer. The only selling costs that would be
incurred on this order would be $3 per fan for shipping. Landor is
now selling 125,000 fans through regular channels each period.
Assume that direct labor is an avoidable cost in this decision.
What should Landor use as a minimum selling price per fan in
negotiating a price for this special order?