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A telecom company has the following information: Output units 20,000 phones Machine-hours 16,000 hours Direct manufacturing labour-hours 10,000 hours Direct materials per unit 50 Direct
A telecom company has the following information: Output units 20,000 phones Machine-hours 16,000 hours Direct manufacturing labour-hours 10,000 hours Direct materials per unit 50 Direct manufacturing labour per hour $ 30 Variable manufacturing overhead costs $ 350,000 Fixed manufacturing overhead costs $ 850,000 Product and process design costs $ 800,000 Marketing and distribution costs $ 950,000 One-time-set up charge for special order $ 30,000 The company has the policy of adding a 30% markup to full costs and currently has excess capacity. The company is approached by a customer to fulfill a one-time-only special order for 2,000 units. All cost relationships remain the same except for a one-time setup charge. No other costs will be incurred. Required: a. Compute the minimum acceptable bid per unit on this one-time-only special order? b. Calculate the full product cost
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