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Xelga [282]
3 years ago
12

Stuart Company, which produces and sells a small digital clock, bases its pricing strategy on a 25 percent markup on total cost.

Based on annual production costs for 20,000 units of product, computations for the sales price per clock follow: Unit-level costs $ 420,000 Fixed costs 60,000 Total cost (a) 480,000 Markup (a × 0.25) 120,000 Total sales (b) $ 600,000 Sales price per unit (b ÷ 20,000) $ 30
Stuart has excess capacity and receives a special order for 7,000 clocks for $24 each. Calculate the contribution margin per unit. Based on this, should Stuart accept the special order?
Business
1 answer:
Murrr4er [49]3 years ago
8 0

Answer:

Stuart should accept the offer because the contribution margin os positive.

Explanation:

Giving the following information:

Units= 20,000

Total variable cost= 420,000

Total fixed cost= 60,000

Mark up= 25%

Special offer= 7,000 units for $24

To determine whether the offer is profitable or not, we need to calculate the unitary variable cost and the unitary contribution margin:

Unitary variable cost= 420,000/20,000= $21

Because it is a special offer and there is unused capacity we won't take into account the fixed costs:

Contribution margin= 24 - 21= $3 per unit

Stuart should accept the offer because the contribution margin os positive.

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Since Bill's organization expected to derive a 50% profit from products that did not exist five years ago, it is safe to assume that Bill's organization was the one to innovate and launch the product. </span>
7 0
3 years ago
The original cost of a LIFO inventory item is below both replacement cost and net realizable value. The net realizable value les
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Answer:

D. Original cost.

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4 0
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What is the totality of a firm's organizational arrangements, including its formal organizational structure, control systems, in
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Answer:

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3 0
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Answer:

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5 0
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