Cara manufactures furniture. The cost accounting system estimates manufacturing costs to be $480 per table, consisting of 60% variable costs and 40% fixed costs. The company has surplus capacity available. It is Cara's policy to add a 50% markup to full costs. Cara is invited to bid on a one-time-only special order to supply 200 tables. Required: What is the lowest price Cara should bid on this special order? Question 6Answer a. $28,800 b. $57,600 c. $48,000 d. $86,400

Cara manufactures furniture. The cost accounting system estimates manufacturing costs to be $480 per table, consisting of 60% variable costs and 40% fixed costs. The company has surplus capacity available. It is Cara's policy to add a 50% markup to full costs. Cara is invited to bid on a one-time-only special order to supply 200 tables. Required: What is the lowest price Cara should bid on this special order? Question 6Answer a. $28,800 b. $57,600 c. $48,000 d. $86,400

Principles of Cost Accounting

17th Edition

ISBN:9781305087408

Author:Edward J. Vanderbeck, Maria R. Mitchell

Publisher:Edward J. Vanderbeck, Maria R. Mitchell

Chapter10: Cost Analysis For Management Decision Making

Section: Chapter Questions

Problem 13P: Deuce Sporting Goods manufactures a high-end model tennis racket. The company’s forecasted income...

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Dimitri Designs has capacity to produce 30,000 desk chairs per year and is currently selling all 30,000 for $240 each. Country Enterprises has approached Dimitri to buy 800 chairs for $210 each. Dimitris normal variable cost is $165 per chair, including $50 per unit in direct labor per chair. Dimitri can produce the special order on an overtime shift, which means that direct labor would be paid overtime at 150% of the normal pay rate. The annual fixed costs will be unaffected by the special order and the contract will not disrupt any of Dimitris other operations. What will be the impact on profits of accepting the order?
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