Gracius Manufacturing is approached by a European customer to fulfill a one-time-only special order for a product similar to one offered to domestic customers. Gracius Manufacturing has a policy of adding a 10% markup to full costs and currently has excess capacity. The following per unit data apply for sales to regular customers: Variable costs: Direct materials $90 Direct labor 30 Manufacturing overhead 40 Marketing costs 30 Fixed costs: Manufacturing overhead 180 Marketing costs 10 Total costs 380 Markup (10% of total costs) 38 Estimated selling price $418 For Gracius Manufacturing, what is the minimum acceptable price of this one-time-only special order? A. $380 B. $160 C. $120 D. $190
Gracius Manufacturing is approached by a European customer to fulfill a one-time-only special order for a product similar to one offered to domestic customers. Gracius Manufacturing has a policy of adding a 10% markup to full costs and currently has excess capacity. The following per unit data apply for sales to regular customers: Variable costs: Direct materials $90 Direct labor 30 Manufacturing overhead 40 Marketing costs 30 Fixed costs: Manufacturing overhead 180 Marketing costs 10 Total costs 380 Markup (10% of total costs) 38 Estimated selling price $418 For Gracius Manufacturing, what is the minimum acceptable price of this one-time-only special order? A. $380 B. $160 C. $120 D. $190
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
Gracius Manufacturing is approached by a European customer to fulfill a one-time-only special order for a product similar to one offered to domestic customers. Gracius Manufacturing has a policy of adding a 10% markup to full costs and currently has excess capacity. The following per unit data apply for sales to regular customers:
|
Variable costs:
|
|
|
Direct materials
|
$90
|
|
Direct labor
|
30
|
|
Manufacturing
|
40
|
|
Marketing costs
|
30
|
|
Fixed costs:
|
|
|
Manufacturing overhead
|
180
|
|
Marketing costs
|
10
|
|
Total costs
|
380
|
|
Markup (10% of total costs)
|
38
|
|
Estimated selling price
|
$418
|
For Gracius Manufacturing, what is the minimum acceptable price of this one-time-only special order?
$380
$160
$120
$190
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