Question
ABC Sdn Bhd manufactures Product 123. The company had been approached by DEF Sdn Bhd for a one-time only special order. The company has a
ABC Sdn Bhd manufactures Product 123. The company had been approached by DEF Sdn Bhd for a one-time only special order. The company has a policy of quoting prices on the basis of marginal cost plus 50 per cent of cost as a profit margin. Currently the company only utilises 70% of its capacity and has enough excess capacity to supply to DEF Sdn Bhd if this order is accepted. The cost to produce one unit of Product 123 is: direct material RM150; direct labour RM20; variable manufacturing overhead RM30; fixed manufacturing overhead RM30.
If DEF Sdn Bhd wants to sign a long-term contract with ABC Sdn Bhd for the supply of Product 123, the price that would most likely be quoted by ABC Sdn Bhd is RM___.
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