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P20.34 Cost-plus pricing: bidding: wholesaler LO 20.3_ Curie Pharmaceuticals is a wholesaler that specialises in packaging bulk drugs, in standard dosages, for local hospitals. The
P20.34 Cost-plus pricing: bidding: wholesaler LO 20.3_ Curie Pharmaceuticals is a wholesaler that specialises in packaging bulk drugs, in standard dosages, for local hospitals. The company has been in business for seven years and has been profitable since its second year of operation. Jenny Lamb, the assistant accountant, installed a standard costing system after joining the company three years ago. The Starbright Children's Hospital has asked Curie to bid on the packaging of one million doses of medication at total product cost plus a markup on total cost of no more than 15 per cent. Starbright defines total product cost as including all variable costs of performing the service, a reasonable amount of fixed overhead and reasonable administrative costs. The hospital will supply all packaging materials and ingredients. Starbright has indicated that any bid more than $0.045 per dose will be rejected. Lamb has accumulated the following information prior to the preparation of the bid: Direct labour $36 per direct labour hour (DLH) Variable overhead $18 per DLH Fixed overhead $30 per DLH Incremental administrative costs $3 000 for the order Production rate 3 000 doses per DLH Required 1. Calculate the minimum price per dose that Curie Pharmaceuticals could bid for the Starbright job without reducing its profit. 2. Calculate the bid price per dose using total product cost and the maximum markup specified by Starbright. 3. Independent of your answer to requirement 2, suppose that the price per dose that Curie calculated
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