Homework Answers
| Answer: |
|
Size of the Order = (Fixed Cost for the special Order + Desired earnings) / Contribution Margin per unit |
|
i.e., Contribution Margin per unit
= Sale Price per unit (-) Variable Cost per
unit = $23 (-) $21 = $2 |
|
Size of the Order = (Fixed Cost for the special Order + Desired earnings) / Contribution Margin per unit = ( $925 + $1,975 ) / $2 = 2,900 / 2 = 1,450 units |
| Size of the order would need to be 1,450 units |
| From given options, option ( a ) is correct i.e., 1,450 units |
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