(Solved):Montoya Enterprises produces a sword that sells for $200. Although the company’s production…

 

Question

Montoya Enterprises produces a sword that sells for $200. Although the company’s production capacity is 3,000 swords per year, only 2,500 swords are currently being produced and sold.

Humperdinck Corporation has offered to purchase 500 swords as a one-time special purchase at a price of per sword. If the special order is accepted, Montoya Enterprises will have to incur additional fixed costs of $1,200.

At Montoya’s current level of production (2,500 swords),

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