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: a. What is the full cost of the product per unit if the marketing costs is $2,000? 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 Incredible Fabricating and Manufacturing, what is the minimum acceptable price of this one-time-only special order? e. For this one-time-only special order, should Incredible Fabricating and Manufacturing consider a price of 55,400 per unit? Why or why not?
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
a. What is the full cost of the product per unit if the marketing costs is $2,000? 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 Incredible Fabricating and Manufacturing, what is the minimum acceptable price of this one-time-only special order? e. For this one-time-only special order, should Incredible Fabricating and Manufacturing consider a price of 55,400 per unit? Why or why not?
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