Decision on Accepting Additional Business
Country Jeans Co. has an annual plant capacity of 64,600 units, and current production is 43,500 units. Monthly fixed costs are $38,100, and variable costs are $25 per unit. The present selling price is $34 per unit. On February 2, 2014, the company received an offer from Miller Company for 14,300 units of the product at $28 each. Miller Company will market the units in a foreign country under its own brand name. The additional business is not expected to affect the domestic selling price or quantity of sales of Country Jeans Co.
Prepare a differential analysis on whether to reject (Alternative 1) or accept (Alternative 2) the Miller order. If an amount is zero, enter zero “0″
What is the minimum price per unit that would produce a positive contribution margin? Round your answer to two decimal places.