Question

Marionette receives an offer to produce dolls for a special event. This is a onetime opportunity during a period when the company has excess capacity. What is the minimum sales price the company should accept for the%E2%80%8B order?

Answer 1

Answer: $23

Step-by-step explanation:

The minimum sales price should be the one that covers Marionette's costs. As the fixed costs remain the same because the excess capacity is being used and thus have already been covered, the relevant costs would be the variable costs;

= Variable manufacturing costs + Variable selling and administrative costs

= 20 + 3

= $23 per unit.