Question

Crandle Manufacturers Inc. is approached by a potential customer to fulfill a one-time-only special order for a product similar to one offered to domestic customers. The company has excess capacity. The following per unit data apply for sales to regular customers: Variable costs: Direct materials $140 Direct labor 100 Manufacturing support 105 Marketing costs 55 Fixed costs: Manufacturing support 175 Marketing costs 65 Total costs 640 Markup (50%) 320 Targeted selling price $960 For Crandle Manufacturers Inc., what is the minimum acceptable price of this special order

Answer 1

Answer:

$400

Explanation:

Calculation to determine the minimum acceptable price of this special order

Using this formula

Minimum acceptable price=Direct materials+ Direct labor+ Manufacturing support +Marketing costs

Let plug in the formula

Minimum acceptable price=$140 + $100 + $105 + $55

Minimum acceptable price=$400

Therefore the minimum acceptable price of this special order is $400