Question
Zola Heaters is approached by Ms. Leila, a new customer, to fulfill a large one-time-only special order for a product similar to one offered to
Zola Heaters is approached by Ms. Leila, a new customer, to fulfill a large one-time-only special order for a product similar to one offered to regular customers. Zola Heaters has excess capacity. The following per unit data apply for sales to regular customers:
Direct materials $470
Direct manufacturing labor 120
Variable manufacturing support 50
Fixed manufacturing support 220
Total manufacturing costs 860
Markup (10% of total manufacturing costs) 86
Estimated selling price $946
Ms. Leila wanted a long-term commitment, and not a one-time-special order, for supplying this product.
Compute the most likely price to be quoted assuming the markup remains the same.
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