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. Fantasia Inc. manufactures industrial components. One of its products, which is used in the construction of industrial air conditioners, is known as C3PO. Data concerning this product are given below:

	$ per unit
Selling price	220
Direct materials	38
Direct labor	1
Variable manufacturing overhead	8
Fixed manufacturing overhead	16
Variable selling expense	4
Fixed selling and administrative expense	16

The above per unit data are based on annual production of 4,000 units of the component. Direct labor can be considered to be a variable cost.

Instructions:

(a) The company has received a special, one-time-only order for 400 units of component C3PO. There would be no variable selling expense on this special order and the total fixed manufacturing overhead and fixed selling and administrative expenses of the company would not be affected by the order. Assuming that Fantasia has excess capacity and can fill the order without cutting back on the production of any product, what is the minimum price per unit on the special order below which the company should not go? (4 points)

(b) The company has received a special, one-time-only order for 500 units of component C3PO. There would be no variable selling expense on this special order and the total fixed manufacturing overhead and fixed selling and administrative expenses of the company would not be affected by the order. However, assume that Fantasia has no excess capacity and this special order would require 30 minutes of the constraining resource, which could be used instead to produce products with a total contribution margin of $10,000. What is the minimum price per unit on the special order below which the company should not go? (4 points)

(c) Refer to the original data in the problem. What is the current contribution margin per unit for component C3PO based on its selling price of $220 and its annual production of 4,000 units? (3 points)

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