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Managerial Accounting

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Albacore Inc: Special Order Minimum Price to Not Change Profits

MGRACT-IKP@0H

Albacore Co. (AC) was approached by a new customer who wanted a special run of 1,200 notebook computers with their companies logo on the frame of the screen. AC 's data last year on the cost to make notebooks shows the following costs per unit:

Unit cost:
Direct Materials \$20
Direct Labor \$30
Variable Manufacturing Overhead \$45
Fixed Manufacturing Overhead \$30
Total cost per unit \$125

If AC accepts the order, they would have to buy a special part for the logo branding, costing \$4,000.

What is the minimum price that AC can accept without hurting profits?