Question - The Southern Digital, Inc. produces a high-quality computer chip. Unit production costs (based on capacity production of 100,000 units per year) follow:
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Direct material
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$50
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Direct labor
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20
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Overhead (20% variable)
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10
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Other information:
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Sales price
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100
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SG&A costs (40% variable)
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15
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Refer to Southern Digital, Inc. Assume, for this question only, that the Memory Division is operating at a level of 70,000 chips per year. What is the minimum price that the division would consider on a "special order" of 1,000 chips to be distributed through normal channels?