Mikaelabelle Products sells product A at a selling price of $40 per unit. Mikaelabelle’s cost per unit based on the full capacity of 500,000 units is as follows:

Mikaelabelle Products sells product A at a selling price of $40 per unit. Mikaelabelle’s cost per unit based on the full capacity of 500,000 units is as follows:

Direct materials                                                             $ 6

Direct labor                                                                       3

Indirect manufacturing (60% of which is fixed)         10

                                                                                          $19

A one-time-only special order offering to buy 50,000 units was received from an overseas distributor. The only other costs that would be incurred on this order would be $4 per unit for shipping. Mikaelabelle has sufficient existing capacity to manufacture the additional units. In negotiating a price for the special order, Mikaelabelle should consider that the minimum selling price per unit should be………..  The answer is $17, but I want to know how do you get to that answer of $17. Thank you.

Looking for a Similar Assignment? Order now and Get 10% Discount! Use Coupon Code "Newclient"