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Variable costs $336000 2000 Coronado has received a sele c tor 2500 If Coronado wants to break even on the order what the $13
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Answer #1

Answer : $8.00

Explanation:

Note : Until unless otherwise mentioned in the question, when sufficient capacity is there for special order then fixed cost is not included in calculation profit from special order.Thus in giving question fixed cost of $392,000 should be ignored for calculating selling price at break even point.   

Variable cost per unit = $336,000 / 56,000 units = $6.00

Shipping cost per unit for special order = $5,000 / 2,500 units = $2.00

At break even point sale = cost (since profit is '0' at break even)

Selling price per unit at break even point = Variable cost per unit + Shipping cost per unit for special order

= $6.00 + $2.00 = $8.00

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