Question

Zena Technology sells arc computer printers for $54 per unit. Unit product costs are:

Answer 1

Answer:

Minimum selling price is $ 37

Explanation:

Computation of minimum selling price

Direct materials per unit                                       $ 15

Direct labour per unit - existing       $ 19

Additional for modification               $  3        

Direct Labor per unit                                             $ 22

Variable cost per unit                                            $ 37

Since the Company has sufficient idle capacity to produce the additional order, no incremental fixed manufacturing capacity is considered.

The minimum selling price should be one which covers the variable costs ( modified for labor increase)