Question

[The following information applies to the questions displayed below.] Corrientes Company produces a single product in its Buenos Aires plant that currently sells for 6.70 p per unit. Fixed costs are expected to amount to 56,000 p for the year, and all variable manufacturing and administrative costs are expected to be incurred at a rate of 2.30 p per unit. Corrientes has two salespeople who are paid strictly on a commission basis. Their commission is 9 percent of the sales revenue they generate. (Ignore income taxes.) (p denotes the peso, Argentina's national currency. Many countries use the peso as their national currency. On the day this exercise was written, Argentina's peso was worth $0.104 U.S. dollar.) 2. The Sorde Company has just approached Corrientes to make a special one-time purchase of 17,000 units. These units would not be sold by the sales personnel, and, therefore, no commission would have to be paid. What is the price Corrientes would have to charge per unit on this special order to earn additional profit of 37,400 p? (Do not round intermediate calculations. Round your answer to 2 decimal places. Enter your answer in pesos.) Sales price required le per unit

Answer 1

Target profit = 37,400 p

Special order = 17,000 units

Variable manufacturing and administrative costs = 2.30 p per unit

Let the selling price per unit in special order be Y p per unit

Target profit = Sales - Variable manufacturing and administrative costs

37,400 = 17,000Y - 17,000 x 2.30

37,400 = 17,000Y- 39,100

Y = 4.5 p per unit

Sales price required = 4.5 p per unit

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