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The Young Company has gathered the following information for a unit of its most popular product:
The Young Company has gathered the following information for a unit of its most popular product:
Direct materials $ 11
Direct labor 5
Overhead (40% variable) 20
Cost to manufacture 36
Desired markup (50%) 18
Target selling price 54
The above cost information is based on 11,100 units. A distributor has offered to buy 2,600 units at a price of $38 per unit. The distributor claims this special order would not disturb regular sales at $54. Special packaging and other selling expenses would be an additional $0.50 per unit for the special order. How many units of regular sales could be lost before this contract is not profitable?
0 units.
2,600 units.
1,300 units.
1,170 units.
