Geneva receives a purchase order to make 5,000 dolls as a one-time event. The good news is that this order is during a period when Geneva does have excess capacity. What is the lowest selling price Geneva should accept for this purchase order?
Geneva Company manufactures dolls that are sold to various customers. The company works at full capacity for half the year to meet peak demand, and operates at 80% capacity for the other half of the year. The following information is provided:
A) $35.00
B) $26.00
C) $29.50
D) $23.50
B) $26.00
Explanation: Variable manufacturing costs per unit + Variable selling and administrative costs per unit = $20 + $6 = $26.
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