The company has been approached by an overseas distributor who wants to purchase 9,500 units on a special price basis. There would be no sales commission on these units. However shipping cost would be increased by 50% and variable administrative cost would be reduced by 25%. In addition a 55,700 special insurance fee would have to be paid by Whitney Company to protect the goods in transit. What unit price would have to be qouted on the 9,500 units by whitney company to allow the company to earn a profit of $14,250 on total operations? Regular business would not be affected by this special order.
Extracted text: WHITNEY COMPANY Income Statement For the Year Ended December 31 Sales (45,000 units at $10 per unit) . Less cost of goods sold: $450,000 Direct materials $90,000 Direct labor . 78,300 98,500 Manufacturing overhead 266,800 Gross margin .... Less operating expenses: Selling expenses: 183,200 Variable: Sales commissions $27,000 Shipping 5,400 32,400 Fixed (advertising, salaries) 120,000 Administrative: Variable (billing and other) Fixed (salaries and other) 1,800 48,000 202,200 Net operating loss $ (19,000)