Question - Vanana Tees sells its cool-zone t-shirts for $24 each. Unit product costs are as follows:
|
Direct materials
|
$4.50
|
|
Direct labor
|
1.80
|
|
Manufacturing overhead
|
3.50
|
|
Total
|
$9.80
|
A special order to purchase 1,200 shirts was recently received. There is enough capacity to fill the order. Filling this order will not disrupt current operations. Vanana expects to incur an additional $2 per unit for additional labor costs due to a slight modification the buyer wants made to the shirts. The manufacturing overhead costs consist of 40% allocated fixed costs. In negotiating a price, how much is Vanana Tees' minimum acceptable selling price per t-shirt?
A. $8.40
B. $11.80
C. $9.70
D. $10.40