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Grant Industries, a manufacturer of electronic parts. has recently received an invitation to bid on a special order for 25,000 units ofone ofits most popular
Grant Industries, a manufacturer of electronic parts. has recently received an invitation to bid on a special order for 25,000 units ofone ofits most popular products. Grant currently manufactures 50.000 units ofthis product in its Loveland. Ohio, plant. The plant is operating at 50% capacity. There will be no marketing costs on the special order. The sales manager ofGrant wants to setthe bid at $14 because she is sure that Grant will get the business at that price. Others on the executive committee ofthe rm object, saying that Grant would lose money on the special order at that price. Units 50,000 35,000 Manufacturing costs: Direct materials $ 200,000 $ 300,000 Direct labor 250,000 3?5,000 Factor}.r overhead 350,000 450,000 Total manufacturing costs $ 399:39'3 $ 1;:[25'5'9'9 Unit cost $ 16 $ 15 Required: 2. What is the relevant cost per unit? What do you think the minimum shortterm bid price per unit should be? What would be the impact on short-term operating income ifthe order is accepted at the price recommended by the sales manager? 4. What would the total opportunity cost be if by accepting the special order the company lost sales of6,800 units to its regular customers? Assume the preceding facts plus a normal selling price of $30 per unit. Complete this question by entering your answers in the tabs below. Required 2 Required 4 what is the relevant cost per unit? what do you think the minimum short-term bid price per unit should be? What would be the impact on shortterm operating income if the order is accepted at the price recommended by the sales manager? Relevant cost per unit Bid price per unit should be any price above Change in sho rtterm operating income Required 4 ) Complete this question by entering your answers in the tabs below. Required 2 Required 4 What would the total opportunity cost be if by accepting the special order the ccnmpanyI lost sales of 6,800 units to its regular customers? Assume the preceding facts plus a normal selling price of $30 per unit. ( Required 2
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