Solution-What is minimum acceptable price of one time

What is minimum acceptable price of one time special order

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Reference no: EM132502473

Welch Manufacturing is approached by a European customer to fulfil a one-time-special order for a product similar to one offered to domestic customers. Welch manufacturing has a policy of adding a 10% markup to full costs and currently has the excess capacity. The following per unit data apply for sales to regular customers.

Variable costs

Direct material 30

Direct labour 10

Manufacturing overhead 15

marketing costs 5

Fixed Costs

Manufacturing overhead 100

Marketing costs 20

Total costs 180

Markup (10%) 18

estimated selling price 198

Question a) For welch, what is the minimum acceptable price of this one time special order?

Question b) If the european customer wanted a long term commitment for supplying this product, what price would most likely be quoted?

Reference no: EM132502473

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What is minimum acceptable price of one time special order

Reference no: EM132502473

Reference no: EM132502473

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