Given the current economic climate (i.e., inflationary pressure) along with prices being elastic, what steps should management take to increase profitability and sales of its products assuming 80 percent capacity utilization? Specifically, you need to address how management will increase sales and profitability given the aforementioned factors.
Gemtron Company is a diversified electronics company specializing in manufacturing semiconductor chips for a number of products for global organizations. Recently, the company. received a special order from a potential new customer. Company A requested that Gemtron manufacture 10,000 semiconductor chips. Gemtron is operating at 90% of its total capacity: therefore, it can fulfil the order without disruption to its normal operations. Gemtron's semiconductor chips normally sells its chips for $20. The finance department provided the following manufacturing cost data to manufacture one chip direct material $6. direct labor $3. variable manufacturing overhead $2 and fixed manufacturing overhead of $6. Assuming Gemtron accepts the request to fill the special order, what is the minimum unit price should Gemtron charge per unit to make a $10,000 incremental profit? (show your work and calculations)
