Question
The following information pertains to the PQR Manufacturing: PQR Manufacturing is approached by a European customer to fulfill a one-time-only special order for a product
The following information pertains to the PQR Manufacturing: PQR Manufacturing is approached by a European customer to fulfill a one-time-only special order for a product similar to one offered to domestic customers. The following per unit data apply for sales to regular customers: Direct materials Direct labor Variable manufacturing support Fixed manufacturing support $1,782 810 1,296 2.808 Total manufacturing costs 6,696 Markup (50%) 3,348 Targeted selling price $ 10,044 PQR Manufacturing has excess capacity. Required: nswer the following questions using the information given: 1. What is the full cost of the product per unit? 2. What is the contribution margin per unit? Which costs are relevant for making the decision regarding this one-time-only special order? Why? For PQR Manufacturing, what is the minimum acceptable price of this one-time-only special order? For this one-time-only special order, should PQR Manufacturing consider a price of $5,400 per unit? Why or why not
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