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(Solved) (Latest ver. Aug 2020) - Parker and Spitzer Manufacturing Special Order Minimum Price

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Parker and Spitzer Manufacturing is approached by a European customer to fulfill a one-time-only special order for a product similar to one offered to domestic customers. The following per unit data apply for sales to regular customers:
Direct materials$66
Direct labor30
Variable manufacturing support48
Fixed manufacturing support104
Total manufacturing costs248
Markup (50%)124
Targeted selling price$372
Parker and Spitzer Manufacturing has excess capacity.
a.What is the full cost of the product per unit?
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 Parker and Spitzer Manufacturing, what is the minimum acceptable price of this one-time-only special order?
e.For this one-time-only special order, should Parker and Spitzer Manufacturing consider a price of $200 per unit? Why or why not?


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This question was answered on: Sep 16, 2020

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