Rellic Inc. has been approached by a potential customer regarding a one-time-only special order for 2,000...

  

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Rellic Inc. has been approached by a potential customer regarding a one-time-only special order for 2,000 units. The following per-unit data apply for Rellic Inc.'s regular customers: Direct materials Direct labour Variable manufacturing support Fixed manufacturing support Total manufacturing costs Markup (50%) Targeted selling price Required (A) What is the full product cost per unit? (B) What is the contribution margin per unit? $66.00 $30.00 $48.00 $104.00 $248.00 $62.00 $310.00 (C) Assume that Rellic Inc. has excess capacity. In this instance, what would be the minimum acceptable price per unit that Rellic Inc. would be willing to accept for this one-time-only special order? (D) Ignore your calculations in (C). Instead, assume that the company has capacity to produce 10,000 units and is currently producing and selling 9,000 units. The new potential customer is interested in purchasing 2,000 units at a price of $230 per unit. Accepting the special order would mean denying sales of 1,000 units to its regular customers. Based on financial considerations alone, should the company accept the special order? By how much would income increase or decrease by accepting the order? (E) What other factors should Rellic Inc. consider before accepting the one-time-only special order? Rellic Inc. has been approached by a potential customer regarding a one-time-only special order for 2,000 units. The following per-unit data apply for Rellic Inc.'s regular customers: Direct materials Direct labour Variable manufacturing support Fixed manufacturing support Total manufacturing costs Markup (50%) Targeted selling price Required (A) What is the full product cost per unit? (B) What is the contribution margin per unit? $66.00 $30.00 $48.00 $104.00 $248.00 $62.00 $310.00 (C) Assume that Rellic Inc. has excess capacity. In this instance, what would be the minimum acceptable price per unit that Rellic Inc. would be willing to accept for this one-time-only special order? (D) Ignore your calculations in (C). Instead, assume that the company has capacity to produce 10,000 units and is currently producing and selling 9,000 units. The new potential customer is interested in purchasing 2,000 units at a price of $230 per unit. Accepting the special order would mean denying sales of 1,000 units to its regular customers. Based on financial considerations alone, should the company accept the special order? By how much would income increase or decrease by accepting the order? (E) What other factors should Rellic Inc. consider before accepting the one-time-only special order?

Answer rating: 100% (QA)

A The full product cost per unit is calculated by summing up all the direct and indirect costs per unit Full product cost per unit Direct materials Di... View the full answer