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 labor 810 Variable manufacturing overhead 1,296 Fixed manufacturing overhead 2,808 Total manufacturing costs 6,896 Markup (50%) 3,348 Targeted selling price $ 10,244 Incredible Fabricating and Manufacturing has ample idle capacity. Required: (05 marks) What is the full cost of the product per unit if the marketing costs is $2,000? What is the contribution margin per unit? Which costs are relevant for making the decision regarding this one-time-only special order? Why? For Incredible Fabricating and Manufacturing, what is the minimum acceptable price of this one-time-only special order? For this one-time-only special order, should Incredible Fabricating and Manufacturing consider a price of $5,400 per unit? Why or why not?

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter10: Short-term Decision Making

Section: Chapter Questions

Problem 7PB: Remarkable Enterprises requires four units of part A for every unit of Al that it produces....

See similar textbooks

Related questions

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 labor 810

Variable manufacturing overhead 1,296

Fixed manufacturing overhead 2,808

Total manufacturing costs 6,896

Markup (50%) 3,348

Targeted selling price $ 10,244

Incredible Fabricating and Manufacturing has ample idle capacity.

Required: (05 marks)

What is the full cost of the product per unit if the marketing costs is $2,000?
What is the contribution margin per unit?
Which costs are relevant for making the decision regarding this one-time-only special order? Why?
For Incredible Fabricating and Manufacturing, what is the minimum acceptable price of this one-time-only special order?
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 Solution

Step by step

Solved in 6 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.

Similar questions