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Axle and Wheel Manufacturing is approached by a European customer to fulfill a one-time-only special order for a product similar to one offered to domestic
Axle and Wheel Manufacturing is approached by a European customer to fulfill a one-time-only special order for a product similar to one offered to domestic customers. The following per unit data apply for sales to regular customers:Direct materials$33 Direct labor15 Variable manufacturing support24 Fixed manufacturing support52 Total manufacturing costs124 Markup (50%)62 Targeted selling price$186 Axle and Wheel Manufacturing has excess capacity. Required: a.What is the full cost of the product per unit? b.What is the contribution margin per unit? c.Which costs are relevant for making the decision regarding this one-time-only special order? Why? d.For Axle and Wheel Manufacturing, what is the minimum acceptable price of this one-time-only special order? e.For this one-time-only special order, should Axle and Wheel Manufacturing consider a price of $100 per unit? Why or why not
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