Carla Vista Packaging Company is a leading manufacturer of cardboard boxes and o

Question

Carla Vista Packaging Company is a leading manufacturer of cardboard boxes and other product packaging solutions. One of the company's major product lines is custom printed cake boxes that are sold to some of the country's best known bakeries at a price of $0.5 perbox. To maintain t quality image, Carla Vista uses a thick premium coated paper for all of its cake boxes. Based on annual production of 1,000,000 boxes, Carla Vista's cost for producing a box is as follows: Paper Ink Direct labor Variable overhead Fixed overhead $0.13 0.03 0.05 0.09 0.10 $0.40 Total cost per box Andrea Borden, a recent graduate of the Culinary Institute of America, is opening a new bakery in her hometown. She recently contacted Brad Lail, Carla Vista's top salesperson, about purchasing cake boxes for her new store. Brad described Carla Vista's boxes, emphasizing the high-quality paper and the unique printing process the company uses. Andrea is looking for ways to lower her operating costs, so after hearing Brad describe Carla Vista's boxes, she told him that all she needed was a simple, unprinted box. Andrea also told Brad that she needs 10,600 boxes and is willing to pay $0.24 per box

Explanation / Answer

Ans: Revised Sales Price= .50 *1.1 = 0.55

Profit on Special order = 10600 units x(0.55-0.40)- export cost

                                         = 10600 x 0.15 -814

                                         = $ 776

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