Variable manufacturing cost per case |
$14 |
Variable selling and administrative cost per case |
$7 |
Total variable cost per case |
$21 |
Total variable cost for 15,000 cases (15,000 x $ 21) |
$315,000 |
Answer:
The minimum selling price that Sweet and Salty Company should accept the order is variable product cost (both manufacturing and selling and administrative) per case of $ 21.
Fixed costs are not relevant because they will be incurred whether the order is accepted or not.
Variable costing is appropriate in this situation.
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