Question: 1 . ) Wesco decided to submit a bid for the 2 3 , 0 0 0 - pound order of Zwinger s new compound.
Wesco decided to submit a bid for the pound order of Zwingers new compound. The order must be delivered by the end of the current month. Zwinger noted this is a onetime order that will not be repeated. Calculate the lowest price Wesco could bid for the order and still exactly cover its incremental manufacturing costs.
Refer to the original data. Assume Zwinger Nursery plans to place regular orders for pound lots of the new compound. Wesco expects the demand for GrowNWeed to remain strong. Therefore, the recurring orders from Zwinger would put Wesco over its twoshift capacity. However, production could be scheduled so that of each Zwinger order could be completed during regular hours. As another option, some GrowNWeed production could be shifted temporarily to overtime so the Zwinger orders could be produced on regular time. Current market prices are the best available estimates of future market prices.
Wescos standard markup percentage for new products is of the full manufacturing cost, including fixed manufacturing overhead. Calculate the price Wesco, Incorporated, would quote Zwinger Nursery for each pound lot using the standard markup percentage.
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