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Star Manufacturing Company is asked by a customer to fulfil a one-time special order for a product similar to one offered to other customers. Following
Star Manufacturing Company is asked by a customer to fulfil a one-time special order for a product similar to one offered to other customers. Following is the per unit data for sales to their regular customers Direct materials Direct labor Variable manufacturing support Fixed manufacturing support s 600 200 300 Total manufacturing costs Markup (50%) Targeted selling price $1,600 809 2400 Star Manufacturing has excess capacity to complete this request without it impacting production for other customers Required: a. What is the full cost of the product per unit if the marketing costs is $4007 b. What is the contribution margin per unit? c. Which costs are relevant for making the decision regarding this one-time-only special order? Why? d. For Star Manufacturing Company, what is the minimum acceptable price of this one-time only special order? e. For this one-time-only special order, should Star Manufacturing Company consider a price of $1,500 per unit? Why or why not
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