The total manufacturing cost for one teddy bear is $8.
<h3> Total manufacturing cost</h3>
Total manufacturing cost for one teddy bear:
Total manufacturing cost=$2.00 + $0.50+ [($15,000× 1/2)/2,000] + [($10,000 × 35%)/2,000]
Total manufacturing cost=$2.00 + $0.50 + ($7,500/2,000) + ($3,500/2,000)
Total manufacturing cost=$2.00+ $0.50 + $3.75+ $1.75
Total manufacturing cost=$8
Therefore the total manufacturing cost for one teddy bear will be $8.
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Answer:
The minimum price which the company should not go below is $26.00
Explanation:
The minimum price which the company should not go below is the price which covers all cost of manufacturing and non-manufacturing to meeting the special, one-time-only order.
Thus we need to calculate the per unit cost of the special order.
<u>Unit cost of the special order</u>
Direct materials $ 13.00
Direct labor $ 7.00
Variable manufacturing overhead $ 6.00
Total Cost $26.00
Note
All fixed cost are<em> irrelevant</em> in this calculation as the cost would be incurred whether or not the special order is accepted.
Also the question specifically mentioned that "There would be no variable selling expense on this special order" We need not to include any variable selling expense
