Question

Geneva Company manufactures dolls that are sold to various distributors. The company produces at full capacity for six months each year to meet peak demand; the manufacturing facility operates at 60% of capacity for the other six months of the year. The company has provided the following data for the year: No. of units produced and sold = 600,000 units Sales price = $50 per unit Variable mfg. costs = $900,000 per year Variable selling and administrative costs = $5 per unit Fixed selling and administrative costs = $500,000 per year Geneva receives an offer to produce 7,000 dolls for a special event. This is a one-time opportunity during a period when the company has excess capacity. What is the minimum sales price the company should accept for the order?
a) $10
b) $15
c) $50
d) $5

Answer 1

I think the answer is c because u make 500 thousand a year