K-Too Everwear Corporation can manufacture mountain climbing shoes for $24.86 per pair in variable raw material costs and $14.08 per pair in variable labor expense. The shoes sell for $135 per pair. Last year, production was 120,000 pairs. Fixed costs were $1,550,000.
What were total production costs?
What is the marginal cost per pair?
What is the average cost?
If the company is considering a one-time order for an extra 5000 pairs, what is the minimum acceptable total revenue from the order? Explain.