Part A

A customer has asked Nike Inc. to supply 6,000 units of its new Marathon Shoe, with some modifications, for $31.30 each. The normal selling price of this product is $46.50 each. The normal unit product cost is computed as follows:

Direct materials $16.40 Direct labour 8.30 Variable manufacturing overhead 4.40 Fixed manufacturing overhead 1.90 Unit product cost $31.00