Managerial Accounting

Free Version

Upgrade subject to access all content


Fritz Partners: Price at Breakeven Special Order Boy Scouts


Fritz Partners was approached by a new customer who wanted a special run of 900 tents with the boy scout logo sewn at the tent opening. Fritz's data last year on the cost to make tents shows the following costs per unit:

Unit cost:
Direct Materials \$2.00
Direct Labor \$3.00
Variable Manufacturing Overhead \$8.50
Fixed Manufacturing Overhead \$4.00
Total cost per unit \$17.50

If Fritz accepts the order, they would have to buy a special part for sewing the logo, costing \$400. Fritz wants to offer them the order at zero profits as a charitable project.

What price should they charge per tent (rounded to two decimal places)?