Question
Mojito Manufacturing is approached by a European customer to fulfill a one-time special order for a product similar to aone offered to domestic customers. The
Mojito Manufacturing is approached by a European customer to fulfill a one-time special order for a product similar to aone offered to domestic customers. The following per unit data apply for sales to regular customers:
Direct Materials | $1,782 |
Direct Labor | 810 |
Variable manufacturing support | 1,296 |
Fixed manufacturing support | 2,808 |
Total manufacturing costs | 6,696 |
Markup (50%) | 3,348 |
Targeted selling price | $10,044 |
Mojito Manufacturing has excess capacity.
Required
a. What is the full cost of the product per unit if the maketing costs is $3,000?
b. What is the contribution margin per unit?
c. Which costs are relevant for making the decision regarding this one-time-only special ordrer?Why?
d. For Mojito Manufacturing, what is the minimum acceptable price of this one-time-only special order?
e. For this one-time-only special order, should Mojito Manufacturing consider a price of $5,400 per unit? Why or Why not?
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