Hospital Supply, Inc. produced hydraulic hoists that were used by hospitals to move bedridden patients....
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Hospital Supply, Inc. produced hydraulic hoists that were used by hospitals to move bedridden patients. The cost per unit of manufacturing and marketing a hydraulic hoist at the company's normal volume of 3,000 units per month are shown below.' Unit manufacturing costs:/ Variable materials Variable labor Variable overhead $550 8251 420 $ 1,795 $ 1,980,000 Fixed manufacturing overhead Unit marketing costs: Variable (at time of sale) Fixed marketing costs $ 2751 $2,310,000 The following questions refer to the data given above. Unless otherwise stated, assume there is no connection between the situations described in the questions; treat each independently. Unless otherwise stated, assume a regular selling price of $4,350 per unit. Ignore income taxes and other costs not mentioned. 3. Special Order. Hospital Supply has an opportunity to enter a foreign market in which price competition is keen. An attraction of the foreign market is that demand there is greatest when demand in the domestic market is quite low. Thus, idle production facilities could be used without affecting domestic business. An order for 1,000 units is being sought at a below normal price in order to enter this market. Shipping costs for this order will amount to $410 per unit while the total costs of obtaining the contract (marketing costs) will be $22,000. Domestic business would be unaffected by this order. What is the minimum unit price Hospital Supply should consider for this order of 1,000 units if its intention is to cover only its incremental costs
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