Seedem Manufacturing was approached by the international seed firm, Planting Concepts, to request a one-time-only special order for a product similar to the domestic product produced at Seedem Manufacturing, which has excess capacity
The managerial accountant reported the following data, per unit, that is charged to regular clients:
Variable costs
Direct materials $85
Direct labor 42
Manufacturing support 72
Marketing costs 32
Fixed costs
Manufacturing support 92
Marketing costs 31
Total cost
Markup (50%)
Targeted Selling Price
Required:
Compute the full cost of the product, the contribution margin per unit, and the minimum acceptable price for the one-time-only special order.
What will be an ideal response?
The full cost of the product is $354; and the contribution margin is $300. The minimum acceptable price for the one-time-only special order is $231.
Explanation: Full cost of product: [($85 + $42 + $72 + $32 + $92 + $31 )] -= $354
Contribution margin per unit: [(Total cost $354 + $177 markup of 50%)] = $531
[($531 - ($85 + $42 + $72 + $32 )] = $300
Minimum acceptable price for the one-time-only special order:
[($85 + $42 + $72 + $32 )] = $231
You might also like to view...
Buerhle Company needs to determine if its indefinite-life intangibles other than goodwill have been impaired and should be reduced or written off on its balance sheet. The impairment test(s) to be used is (are) Recoverability Test Fair Value Test
a. Yes Yes b. Yes No c. No Yes d. No No
Sheffield Cargo serves both consumer and business markets, but most of its revenue comes from its business customers
Of late, the business customers of Sheffield Cargo have demanded a change in the packaging of heavy cargo along with a more sophisticated and user-friendly extranet framework. Sheffield Cargo is under pressure to offer better products and services or risk losing a huge portion of its customers. This is an example of ________. A) a new task B) a modified rebuy situation C) a straight rebuy situation D) trade exchange E) reverse auction