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Silver Lake Cabinets is approached by Ms. Jenny Zhang, a new customer, to fulfill a large onetime-only special order for a product similar to one
Silver Lake Cabinets is approached by Ms. Jenny Zhang, a new customer, to fulfill a large onetime-only special order for a product similar to one offered to regular customers. The following per unit data apply for sales to regular customers: \begin{tabular}{|l|r|} \hline Direct materials & $100 \\ \hline Direct labour & 125 \\ \hline Variable manufacturing support & 60 \\ \hline Fixed manufacturing support & 75 \\ \hline Total manufacturing costs & $360 \\ \hline Markup (60\%) & 216 \\ \hline Targeted selling price & $576 \\ \hline \end{tabular} Silver Lake Cabinets has excess capacity. Ms. Zhang wants the cabinets in cherry rather than oak, so direct material costs will increase by $30 per unit. Required: a. For Silver Lake Cabinets, what is the minimum acceptable price of this one-time-only special order? b. Other than price, what other items should Silver Lake Cabinets consider before accepting this one-time-only special order? c. How would the analysis differ if there was limited capacity
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