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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.
 
Required:
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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