Question

Data Table Cases of candy produced and sold Sales price Variable manufacturing costs Fixed manufacturing costs Variable selling and administrative costs Fixed selling and administrative costs 1,900,000 cases $41.00 per case 14.00 per case 6,700,000 per year 7.00 per case 3,500,000 per year Print Done
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media%2Fefe%2Fefe5c45f-6a86-4491-b9c5-28
media%2F696%2F69644157-1604-43c0-876e-41
media%2F3d9%2F3d9e8846-a6e5-4dd3-bb8e-36
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Answer #1

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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