The company has been approached by an overseas distributor who wants to purchase 9,500 units on a special price basis. There would be no sales commission on these units. However shipping cost would be increased by 50% and variable administrative cost would be reduced by 25%. In addition a 55,700 special insurance fee would have to be paid by Whitney Company to protect the goods in transit. What unit price would have to be qouted on the 9,500 units by whitney company
The company has been approached by an overseas distributor who wants to purchase 9,500 units on a special price basis. There would be no sales commission on these units. However shipping cost would be increased by 50% and variable administrative cost would be reduced by 25%. In addition a 55,700 special insurance fee would have to be paid by Whitney Company to protect the goods in transit. What unit price would have to be qouted on the 9,500 units by whitney company
Cornerstones of Cost Management (Cornerstones Series)
4th Edition
ISBN:9781305970663
Author:Don R. Hansen, Maryanne M. Mowen
Publisher:Don R. Hansen, Maryanne M. Mowen
Chapter2: Basic Cost Management Concepts
Section: Chapter Questions
Problem 22E: Ellerson Company provided the following information for the last calendar year: During the year,...
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The company has been approached by an overseas distributor who wants to purchase 9,500 units on a special price basis. There would be no sales commission on these units. However shipping cost would be increased by 50% and variable administrative cost would be reduced by 25%. In addition a 55,700 special insurance fee would have to be paid by Whitney Company to protect the goods in transit. What unit price would have to be qouted on the 9,500 units by whitney company to allow the company to earn a profit of $14,250 on total operations? Regular business would not be affected by this special order.
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