Question - Special-Order Pricing Decision
Bob Johnson, Inc., sells a lounging chair for $24 per unit. It incurs the following costs for the product: direct materials, $12; direct labor, $8; variable overhead, $3; and fixed overhead, $1.
The company has received a special order for 46 chairs. The order would require rental of a special tool for $270. Bob Johnson, Inc., has sufficient idle capacity to produce the chairs for this order.
Required: Calculate the minimum price per chair that the company could charge for this special order if management requires a $510 minimum profit on any special order. If required round your intermediate calculations to two decimal places.