Hall Company produces 1,000,000 widgets per year and has a total plant capacity of 1,200,000 widgets. Based on making 1,000,000 widgets a year, the revenues and costs for one widget are
|
Revenue |
$23.00 |
|
Direct materials |
5.00 |
|
Direct labour |
2.50 |
|
Variable overhead |
2.00 |
|
Fixed overhead |
10.00 |
|
Total cost |
$19.50 |
The company was approached by a key customer to provide 200,000 widgets at a reduced price. What is the minimum price the company could accept on this special order?
- $9.50
- $19.50
- $23.00
- None of the above