10 May WHICH COSTS ARE RELEVANT FOR MAKING THE DECISION REGARDING THIS ONE-TIME-ONLY SPECIAL ORDER?
Parker and Spitzer Manufacturing Special Order Minimum PriceParker and Spitzer 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 $66Direct labor 30Variable manufacturing support 48Fixed manufacturing support 104Total manufacturing costs 248Markup (50%) 124Targeted selling price $372Parker and Spitzer Manufacturing has excess capacity.Required:a. What is the full cost of the product per unit?b. What is the contribution margin per unit.c. Which costs are relevant for making the decision regarding this one-time-only special order? Why?d. For Parker and Spitzer Manufacturing what is the minimum acceptable price of this one-time-only special order? e. For this one-time-only special order should Parker and Spitzer Manufacturing consider a price of $200 per unit? Why or why not?
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