1. The cost accounting system for a furniture manufacturing estimates manufacturing costs to be $190 per unit, consisting of 20% fixed costs and 80% variable costs. The company has surplus capacity available. It is company policy to add a 25% markup to full costs. The Company is invited to bid on a one-time-only special order to supply 180 tables. What is the lowest price the company should bid on this special order?

   		$42,750
   		$34,200
   		$27,360
   		$6,840

1. Morris Inc. is approached by a potential customer to fulfill a one-time-only special order for a product similar to one offered to domestic customers. The company has excess capacity. The following per unit data apply for sales to regular customers:

   Variable costs:

   Direct materials $130

   Direct labor 60

   Manufacturing support 105

   Marketing costs 90

   Fixed costs:

   Manufacturing support 175

   Marketing costs 65

   Total costs 630

   Markup (50%) 315

   Targeted selling price $945

   What is the change in operating profits if the one-time-only special order for 1,130 units is accepted for $550 a unit by Morris?

   		$170,170 decrease in operating profits
   		$164,170 increase in operating profits
   		$164,800 increase in operating profits
   		$186,450 decrease in operating profits