A client approached to Incredible Fabricating and Manufacturing for a one-time special order for Steel doors. These
Question:
A client approached to Incredible Fabricating and Manufacturing for a one-time special order for Steel doors. These Steel doors are fabricated and manufactured to local clients regularly.
The cost per unit information apply for deals to regular clients:
Direct materials$1,982
Direct labor810
Variable manufacturing overhead1,296
Fixed manufacturing overhead2,808
Total manufacturing costs6,896
Markup (50%)3,348
Targeted selling price$ 10,244
Incredible Fabricating and Manufacturing has ample idle capacity.
Required: (05 marks)
a.What is the full cost of the product per unit if the marketing costs is $2,000?
b.What is the contribution margin per unit?
c.Which costs are relevant for making the decision regarding this one-time-only special order? Why?
d.For Incredible Fabricating and Manufacturing, what is the minimum acceptable price of this one-time-only special order?
e. For this one-time-only special order, should Incredible Fabricating and Manufacturing consider a price of $5,400 per unit? Why or why not?
Expert Answer:
a Full cost of the product per unit Particulars Amount Direct Materials 1982 Direct Labour 810 Varia... View the full answer
