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.