Zolas' Heaters is approached by Ms. Leila, a new customer, to fulfill a large one-time-only special order for a product similar to one offered to regular customers. Zolas' Heaters has excess capacity. The following per unit data apply for sales to regular customers: Direct materials $450.00 Direct manufacturing labor 160.00 Variable manufacturing support 100.00 Fixed manufacturing support 210.00 Total manufacturing costs 920.00 Markup (25% of total manufacturing costs) 230.00 Estimated selling price $1150.00 For Zolas' Heaters, what is the minimum acceptable price of this one-time-only special order

Respuesta :

Answer:

Zolas' Heaters

The minimum acceptable price of this one-time-only special order is:

= $887.50.

Explanation:

a) Data and Calculations:

Direct materials                                             $450.00

Direct manufacturing labor                             160.00

Variable manufacturing support                     100.00

Fixed manufacturing support                         210.00

Total manufacturing costs                             920.00

Markup (25% of total manufacturing costs) 230.00

Estimated selling price                               $1,150.00

The minimum acceptable price of this one-time-only special order:

Direct materials                                             $450.00

Direct manufacturing labor                             160.00

Variable manufacturing support                     100.00

Total manufacturing costs                               710.00

Markup (25% of total variable mfg costs)       177.50

Selling price                                                   $887.50