BCC has received a request from a school board for 200 computers. Using the full-cost criteria and desired level of return, which one of the following prices should be recommended to BCC's management for bidding purposes? Round answer to one decimal place.
BCC has received a request from a school board for 200 computers. Using the full-cost criteria and desired level of return, which one of the following prices should be recommended to BCC's management for bidding purposes? Round answer to one decimal place.
Chapter1: Financial Statements And Business Decisions
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Transcribed Image Text:Question 11
Basic Computer Company (BCC) sells its microcomputers using bid pricing. It develops its bids on a full
cost basis. Full cost includes estimated material, labor, variable overheads, fixed manufacturing
overheads, and reasonable incremental computer assembly administrative costs, plus a 10% return on
full cost. BCC believes bids in excess of $1,050 per computer are not likely to be considered.
BCC's current cost structure, based on its normal production levels, is $500 for materials per computer
and $20 per labor hour. Assembly and testing of each computer requires 17 labor hours. BCC expects to
incur variable manufacturing overhead of $2 per labor hour, fixed manufacturing overhead of $3 per
labor hour, and incremental administrative costs of $8 per computer assembled.
BCC has received a request from a school board for 200 computers. Using the full-cost criteria and
desired level of return, which one of the following prices should be recommended to BCC's management
for bidding purposes?
Round answer to one decimal place.
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