On November 15, 2014 the Cooper Co received a special order for 6,000 three wood golf club sets. These gold clubs will be marketed in asia. Seto imports Inc, the purchasing company, wants the clubs bulk packaged and is willing to pay $72 per set for the clubs. The president of the copper Co has gathered the following product costing information about the set of the woods being discussed.
Direct materials (wood) $900 per 100 sets
Direct materials (metal shafts) $1,200 per 100 sets
Direct materials (grips) $200 per 100 sets
Direct labor is $27 per set
Variable manufacturing costs are $19 per set
Fixed manufacturing costs are 20% of direct labor dollars
Variable selling expenses are $14 pet set
Variable shipping costs are $9 per set
Fixed general and administrative costs are 30% of direct labor dollars.
Bulk shipping costs will total $10,000 this eliminating both variable selling and variable shipping costs from consideration. the company did not expect this order and will reach planned production capacity for the year. however, there is enough plant capacity from the special order. round answers to two decimal places.
a) prepare an analysis for the president to use in deciding whether to accept or reject the offer by Seto import Inc. what decision should be mad?
b) what is the lowest possible price the copper Co could charge per set of woods and still make a $12,000 profit on this order?