Question

Mountain Gear can manufacture mountain climbing shoes for $37.11 per pair in variable raw material costs and $15.09 per pair in variable labor costs. The shoes sell for $99 per pair. Last year, production was 248,000 pairs and fixed costs were $1.67 million. The maximum production level for the firm given its current assets is 275,000 pairs. What is the minimum acceptable total revenue the company should accept for a one-time order for an extra 12,000 pairs

Answer 1

Answer:

minimum acceptable total revenue the company should accept is $626,400

Explanation:

The computation of the minimum acceptable total revenue the company should accept is given below:

= Number of pairs × (raw material cost per pair + variable labor cost per pair)

= 12,000 pairs × ($37.11 + $15.09)

= $626,400

Hence, the minimum acceptable total revenue the company should accept is $626,400