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Required: 1. Alanco has decided to submit a bid for a 25 BOOkilogram order of Taylor Nursery's new compound. The order must be delivered by
Required: 1. Alanco has decided to submit a bid for a 25 BOOkilogram order of Taylor Nursery's new compound. The order must be delivered by the end of the current month. Taylor Nursery has indicated that this is a onetime order that will not be repeated. Calculate the lowest price that Alanco could bid for the order without reducing its operating income. 2. Refer to the original data. Assume that Taylor Nursery plans to place regular orders for 25,000 kilograrn lots of the new compound during the coming year. Alanco expects the demand for Double Duty to remain strong. Therefore, the recurring orders from Taylor Nursery would put Alanco over its twoshift capacity. However, production could be scheduled so that 60% of each Taylor Nursery order could be completed during regular hours. As another option, some Double Duty production could be shifted temporarily to overtime so that the Taylor Nursery orders could be produced on regular time. Current market prices are the best available estimates of future market prices. Alanco's stande markup policy for new products is 40% of the full manufacturing cost, including fixed manufacturing overhead. Calculate the price that Alch would quote Taylor Nursery for each 25 ,0007 kilogram lot of the new compound, assuming that it is to be treated as a new product and this pricing policy is followed
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