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This is a question about pricing decisions. Hope to get the details of calculation. thanks! Acrolein Company is a wholesaler specialising in packaging bulk drugs

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This is a question about pricing decisions. Hope to get the details of calculation. thanks!

image text in transcribed
Acrolein Company is a wholesaler specialising in packaging bulk drugs in standard dosages, for local hospitals. The company has been in business for seven years and has been protable since its second year of operation. Samantha Black, the assistant accountant, installed a standard costing system aer joining the company three years ago. Sydney Children's Hospital (SCH) has asked Acrolein to bid on the packaging of 1,000,000 doses of medication at total product cost plus a maximum markup on total cost of 15%. SCH defines 'total product cost1 as including all variable costs of performing the service, a reasonable amount of fixed overhead and reasonable administrative costs. The hospital will supply all packaging materials and ingredients. Samantha has accumulated the following information prior to the preparation of the bid: Use these cells tor working calculations if desired. Remember to always cell reference. Question data Total number of doses to be produced 1,000,000 Maximum markup on total cost 15.0% Direct labour (cost per direct labour hour) $24.00 Variable overhead (cost per direct labour hour) $13.00 Fixed overhead (cost per direct labour hour) $30.00 Incremental administrative cost (for the order) $3,000 Production rate (doses pet DLH) 2,000 RE OUJRED: 1. Calculate the minimum price per dose that Acrolein could bid for the SCH job without reducing Acrolein's profit

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