Maximizing Profit: Determining the Minimum Price for 1,800 Units

ACC 2021004 Written Communication Assignment Bashaw Due:May4 Overview:The purpose of this assignment is to develop written communication skills to support managerial decision making. Students will use and interpret accounting data to support their decisions. Students must document their rationale for making each decision by referencing the appropriate facts and figures involved in this case. Grading: This assignment is worth 30 points and grading will be based on determining the right answer for each question and documenting the explanation in a very clear and concise writing style. Grammar will be assessed and graded, and typographical errors will be penalized. Please have a classmate or friend proof‐read your document. Please type your responses in Word and email your document to me. Students are not allowed to share any answers or share any electronic documents. Please refer to the Academic Integrity Policy. Case: The Dial Company specializes in producing a set of wood patio furniture consisting of a table and four chairs. The set enjoys great popularity, and the company has ample orders to keep production going at its full capacity of 3,000 sets per year. Annual cost data at full capacity follow:

Direct Labor117,000 $Advertising45,000 $Factory Supervision42,000 $Property Taxes, factory building4,500 $Sales Commissions75,000 $Insurance, factory2,400 $Depreciation, admin office equip4,200 $Lease cost, factory equipment15,000 $Indirect Materials, factory4,800 $Depreciation, factory building9,000 $Admin office supplies (billing)3,300 $Admin office salaries66,000 $Direct Materials Used96,000 $Utilities, Factory18,000 $The patio sets are normally sold for $220 per set. Dial can increase capacity by 1,200 units, but must pay $128,000 to do so. If a special order is accepted, no sales commissions will need to be paid.