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Welch 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. Welch
Welch 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. Welch Manufacturing has excess capacity. The following per unit data apply for sales to regular customers: Variable costs: Direct materials $40 Direct labor 20 Manufacturing support 35 Marketing costs 15 Fixed costs: Manufacturing support 45 Marketing costs 15 Total costs 170 Markup (50%) 85 Targeted selling price $255 i. What is the full cost of the product per unit? ii. What is the contribution margin per unit? iii. For Welch Manufacturing, what is the minimum acceptable price of this special order? iv. What is the change in operating profits if the 1,000 unit one-time-only special order is accepted for $180 a unit by Welch
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