Purple Trees manufactures rustic furniture. The cost accounting system estimates manufacturing costs to be $240 per table, consisting of 60% variable costs and 40% fixed costs
The company has surplus capacity available. It is Purple Trees' policy to add a 75% markup to full costs.
A large hotel chain is currently expanding and has decided to decorate all new hotels using the rustic style. Purple Trees is invited to submit a bid to the hotel chain. What per unit price will Purple Trees most likely bid on this long-term order?
A) $168 per unit
B) $180 per unit
C) $252 per unit
D) $420 per unit
Answer: D
Business
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