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sheridan furniture manufactures outdoor patio sets with the following unit selling price and unit costs at capacity of 5070 units: unit selling price $1590 direct materials 405 direct labor 335 variable overhead 145 fixed overhead 80 a wholesale outlet has offered to purchase 300 outdoor patio sets but is not willing to pay the retail price of $1590. what is the lowest price that sheridan furniture should accept if it is currently operating at full capacity and is unable to add additional capacity? $740

Answer :

The lowest price that sheridan furniture should accept if it is currently operating at full capacity and is unable to add additional capacity is $11,600.

A price is the amount of price or repayment given through one birthday birthday celebration to some other in go back for items or services.

To determine the lower cost that sheridan furniture should accept if it is currently operating at full capacity and is unable to add additional capacity, you can calculate using this formula:

The relevant cost of making                                                

Variable cost = 145 ×  80 = 11,600                                  

Fixed cost   = 80 ×  1,590 = 127,200                                                        

Total cost = 127,200 + 11,600 = 138,800                                                          

Relevant of buying 80 × 1,590 =  127,200

Saving in cost by buying = 138,800 - 127,200 = $11,600

Therefore, the lowest price that sheridan furniture should accept if it is currently operating at full capacity and is unable to add additional capacity is $11,600.

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