Crandle Manufacturers Inc is approached by a potential custo

Crandle Manufacturers 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                        $140

                                    Direct labor                                100

                                    Manufacturing support              105

                                    Marketing costs                           55

                              Fixed costs:

                                    Manufacturing support              175

                                    Marketing costs                           65

                              Total costs                                        640

                              Markup (50%)                                  320

                              Targeted selling price                      $960

For Crandle Manufacturers Inc., what is the minimum acceptable price of this special order?

Solution

Calculate minimum acceptale price of this special order ;

Minimum selling price = $400