1. Golden Company sells its product for $42 per unit. The company's unit product cost based on the full capacity of 400,000 units is as follows:
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Direct materials
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$8
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Direct labor
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10
|
|
Manufacturing overhead
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12
|
|
Unit product cost
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$30
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A special order offering to buy 40,000 units has been received from a foreign distributor. The only selling costs that would be incurred on this order would be $6 per unit for shipping. The company has sufficient idle capacity to manufacture the additional units. Two-thirds of the manufacturing overhead is fixed and would not be affected by this order. Assume that direct labor is an avoidable cost in this decision. In negotiating a price for the special order, what is the minimum acceptable selling price per unit?