2C2H RAYMUND INC. CURRENTLY SELLS ITS ONLY PRODUCT TO MALL-STORES. R...

239.

CSO: 2C2c

LOS: 2C2h

Raymund Inc. currently sells its only product to Mall-Stores. Raymund has received a

one-time-only order for 2,000 units from another buyer. Sale of the special order items

will not require any additional selling effort. Raymund has a manufacturing capacity to

produce 7,000 units. Raymund has an effective income tax rate of 40%. Raymund’s

Income Statement, before consideration of the one-time-only order, is as follows.

Sales (5,000 units at $20 per unit)

$100,000

Variable manufacturing costs

$50,000

Variable selling costs

15,000

65,000

Contribution margin

35,000

Fixed manufacturing costs

16,000

Fixed selling costs

4,000

20,000

Operating income

15,000

Income taxes

6,000

Net income

$ 9,000

In negotiating a price for the special order, Raymund should set the minimum per unit

selling price at

a.

$10.

b.

$13.

c.

$17.

d.

$18.