Explain what is minimum acceptable price of one-time-only

Assignment Help Cost Accounting

Reference no: EM132634522 , Length: 20

A client approached to Incredible Fabricating and Manufacturing for a one-time special order for Steel doors. These Steel doors are fabricated and manufactured to local clients regularly.

The cost per unit information apply for deals to regular clients:

Direct materials $1,982

Direct labor 810

Variable manufacturing overhead 1,296

Fixed manufacturing overhead 2,808

Total manufacturing costs 6,896

Markup (50%) 3,348

Targeted selling price $ 10,244

Incredible Fabricating and Manufacturing has ample idle capacity.

Required:

Question a. What is the full cost of the product per unit if the marketing costs is $2,000?

Question b. What is the contribution margin per unit?

Question c. Which costs are relevant for making the decision regarding this one-time-only special order? Why?

Question d. For Incredible Fabricating and Manufacturing, what is the minimum acceptable price of this one-time-only special order?

Question e. For this one-time-only special order, should Incredible Fabricating and Manufacturing consider a price of $5,400 per unit? Why or why not?

Reference no: EM132634522

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