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What is the minimum acceptable price of this one-time-only

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Reference no: EM13496388

Silver Lake Cabinets is approached by Ms. Jenny Zhang, a new customer, to fulfill a large one-time-only special order for a product similar to one offered to regular customers. The following per unit data apply for sales to regular customers:

Direct materials $100
Direct labor 125
Variable manufacturing support 60
Fixed manufacturing support 75
Total manufacturing costs 360
Markup (60%) 216
Targeted selling price $576

Silver Lake Cabinets has excess capacity. Ms. Zhang wants the cabinets in cherry rather than oak, so direct material costs will increase by $30 per unit.

Required:

a. For Silver Lake Cabinets, what is the minimum acceptable price of this one-time-only special order?

b. Other than price, what other items should Silver Lake Cabinets consider before accepting this one-time-only special order?

c. How would the analysis differ if there was limited capacity?

Reference no: EM13496388

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