Question
Grant's Kitchens is approached by Ms. Tammy Wang, a new customer, to fulfill a large one time only special order for a product similar to
Grant's Kitchens is approached by Ms. Tammy Wang, a new customer, to fulfill a large one time only special order for a product similar to one offered to regular customers.
The following per unit data apply for sales to regular customers:
Direct materials $455
Direct labour 300
Variable manufacturing support 45
Fixed manufacturing support 100
Total manufacturing costs $900
Markup (60%) 540
Targeted selling price $1,440
Grant's Kitchens has excess capacity. Ms. Wang wants the cabinets in cherry rather than oak, so direct material costs will increase by $30 per unit.
For Grant's Kitchens, what is the minimum acceptable price of this onetimeonly special order?
A. $830 B. $930 C. $900 D. $800 E. $1,440
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