Supreme M Co has the following information relates to its operations per month: Output units Machine-hours...

Transcribed Image Text:

Supreme M Co has the following information relates to its operations per month: Output units Machine-hours I 15,000 units 4,000 machine hours 5,000 direct labor hours Direct manufacturing labor-hours Direct materials costs per unit $200 $12 $300,000 Direct manufacturing labor cost per hour Fixed manufacturing overhead costs Variable manufacturing overhead costs Product design costs $150,000 $200,000 Marketing and distribution costs $250,000 Required: 1. What is the full cost per unit if it adopts long-run pricing? (1.5 marks) 2. In view of keen competition, the CEO asked the accountant how to price its product so as to stay competitive in the market. Other than cost-based pricing, suggest one pricing method to CEO. (1 mark) 3. Supreme M Co. is approached by an overseas customer to fulfill a one-time-only special order for 1,000 units. All costs remain the same except for an additional one-time setup charge of $20,000. No additional design, marketing, or distribution costs will be incurred. What is the minimum acceptable price per unit on this one-time-only special order? (1.5 marks) 4. Other than cost, name ONE factor that Supreme M Co. has to consider when pricing a special order. (1 mark) Note: show all your workings to support your answers. Supreme M Co has the following information relates to its operations per month: Output units Machine-hours I 15,000 units 4,000 machine hours 5,000 direct labor hours Direct manufacturing labor-hours Direct materials costs per unit $200 $12 $300,000 Direct manufacturing labor cost per hour Fixed manufacturing overhead costs Variable manufacturing overhead costs Product design costs $150,000 $200,000 Marketing and distribution costs $250,000 Required: 1. What is the full cost per unit if it adopts long-run pricing? (1.5 marks) 2. In view of keen competition, the CEO asked the accountant how to price its product so as to stay competitive in the market. Other than cost-based pricing, suggest one pricing method to CEO. (1 mark) 3. Supreme M Co. is approached by an overseas customer to fulfill a one-time-only special order for 1,000 units. All costs remain the same except for an additional one-time setup charge of $20,000. No additional design, marketing, or distribution costs will be incurred. What is the minimum acceptable price per unit on this one-time-only special order? (1.5 marks) 4. Other than cost, name ONE factor that Supreme M Co. has to consider when pricing a special order. (1 mark) Note: show all your workings to support your answers.

Answer rating: 100% (QA)

1 Production 15000 Per Anum Direct Material 20000 Given Direct manufacturing labour 1200 Given Varia... View the full answer