Parker Plumbing has received a special one-time order for 1,500 faucets (units)
ID: 2476883 • Letter: P
Question
Parker Plumbing has received a special one-time order for 1,500 faucets (units) at $15 per unit. Parker currently produces and sells 7,500 units at $16.00 each. This level represents 75% of its capacity. Production costs for these units are $19.50 per unit, which includes $13.00 variable cost and $6.50 fixed cost. To produce the special order, a new machine needs to be purchased at a cost of $725 with a zero salvage value. Management expects no other changes in costs as a result of the additional production. If Parker wishes to earn $1,375 on the special order, the size of the order would need to be: 2,100 units. 4,200 units. 1,050 units. 935 units. 100 units.
Explanation / Answer
The size of the order would need to be 1,050 units if the Parker wishes to earn $1,375 on the special order