Compare / contrast. Why are these two different?
Q.1 (a) Compare / contrast. Why are these two different?
- Inventoriable costs and period costs.
- Direct costs and indirect costs.
Manufacturing costs and non-manufacturing costs.- Period costs and product costs.
- Operating costs and non-operating costs.
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?
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