12-30 Relevant-cost approach to prioing dooinions. Stardom Inc. cans poaches for sale to food distrib- utors. All costs are classified as other manufacturing or marketing. Stardom prepares monthly budgets. The March 2018 budgeted absorption-conting statement of comprehensive Income is as follows: Revenue (1,000 cratos $100 a crate) $100,000 Cost of goods sold 60,000 Gross margin 40,000 Marketing costs 30,000 Operating income $ 10,000 Normal markup percentage: $40,000 $60,000 - 66.7% of absorption cost Monthly costs are classified as fixed or variable (with respect to the number of crates produced for manu- tacturing costs and with respect to the number of crates sold for marketing costak Fixed Variable Manufacturing $20.000 $40,000 Marketing 16,000 14 000 Stardom has the capacity to can 1,500 crates per month. The relevant range in which monthly fixed manu- facturing costs will be fixed" is from 500 to 1,500 crates per month Required 1. Calculate the markup percentage based on total variable costs 2. Assume that a new customer approaches Stardom to buy 200 crates at $55 per crate for cash. The customer does not require any marketing effort. Additional manufacturing costs of $4,000 for special packaging will be required. Stardom believes that this is a one-time-only special order because the customer is discontinuing business in six weeks' time. Stardom is raluctant to accept this 200-crate special order because the $55 per crate price is below the $60-per-crate absorption cost. Do you agree with this reasoning? Explain 3. Assume that the new customer decides to remain in business How would this longovity affect your Willingness to accept the $55 per crate offer? Explain