Cocoa Company produces chocolate bars. The following information is related to normal operations of the company each month: Output units 15,000 bars Machine-hours 4,000 hours Direct manufacturing labor-hours 5,000 hours Direct manufacturing labor per hour $12 Direct materials per unit $100 Variable manufacturing overhead costs $150,000 Fixed manufacturing overhead 00,000 Product and process design costs $200,000 Marketing and distribution cost $250,000 Required: a. For long-run pricing decisions, how much is the full-cost base per unit? b. Cocoa Company was offered by a company from abroad to fulfill a special order (one-time order) for 1000 units. All costs are the same except for an additional one-time installation fee of $ 40,000. No additional design, marketing or distribution costs will be incurred. What is the minimum bid that can be received per unit on this one-time special order?
Cocoa Company produces chocolate bars. The following information is related to normal operations of the company each month: Output units 15,000 bars Machine-hours 4,000 hours Direct manufacturing labor-hours 5,000 hours Direct manufacturing labor per hour $12 Direct materials per unit $100 Variable manufacturing overhead costs $150,000 Fixed manufacturing overhead 00,000 Product and process design costs $200,000 Marketing and distribution cost $250,000 Required: a. For long-run pricing decisions, how much is the full-cost base per unit? b. Cocoa Company was offered by a company from abroad to fulfill a special order (one-time order) for 1000 units. All costs are the same except for an additional one-time installation fee of $ 40,000. No additional design, marketing or distribution costs will be incurred. What is the minimum bid that can be received per unit on this one-time special order?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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Transcribed Image Text:Cocoa Company produces chocolate bars. The following information is related to normal
operations of the company each month:
Output units
15,000 bars
Machine-hours
4,000 hours
Direct manufacturing labor-hours
5,000 hours
Direct manufacturing labor per hour
$12
Direct materials per unit
$100
Variable manufacturing overhead costs
$150,000
Fixed manufacturing overhead costs
$300,000
Product and process design costs
$200,000
Marketing and distribution cost
$250,000
Required:
a. For long-run pricing decisions, how much is the full-cost base per unit?
b. Cocoa Company was offered by a company from abroad to fulfill a special order
(one-time order) for 1000 units. All costs are the same except for an additional one-time
installation fee of $ 40,000. No additional design, marketing or distribution costs will be
incurred. What is the minimum bid that can be received per unit on this one-time special
order?
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