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1. Loft Lake Cabinets is approached by Ms. Jenny Zhang, a new customer, to fulfill a large one-time-only special order for a product similar to
1. Loft Lake Cabinets is approached by Ms. Jenny Zhang, a new customer, to fulfill a large one-time-only special order for a product similar to one offered to regular customers. The following per unit data apply for sales to regular customers: Direct materials$50.00 Direct labor62.50 Variable manufacturing support30.00 Fixed manufacturing support37.50 Total manufacturing costs180.00 Markup (60%)108.00 Targeted selling price$288.00 Loft Lake Cabinets has excess capacity. Ms. Zhang wants the cabinets in cherry rather than oak, so direct material costs will increase by $15 per unit. Required: a.For Loft Lake Cabinets, what is the minimum acceptable price of this one-time-only special order? b.Other than price, what other items should Loft Lake Cabinets consider before accepting this one-time-only special order? c.How would the analysis differ if there was limited capacity?
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