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: 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?

Managerial Accounting: The Cornerstone of Business Decision-Making

7th Edition

ISBN:9781337115773

Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Publisher:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Chapter8: Tactical Decision-making And Relevant Analysis

Section: Chapter Questions

Problem 39E

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Q.1 (b) 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:

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?

(kindly help me in point 4 and 5.)

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