Handcrafted wooden birdhouses

Assignment Help Financial Accounting

Reference no: EM13920911

Preston Wade Preston Wade, a local craftsman, normally sells his handcrafted wooden birdhouses for $145 each. Preston has the capacity to produce as many as 60 birdhouses a week. In a normal week, Preston makes 20 birdhouses with the following costs per unit:

Direct materials $12.00

Direct labor $15.00

Variable overhead $3.00

Fixed overhead $5.00

Refer to the Preston Wade information above. Preston has received a special order from a local plant nursery for 40 birdhouses. The nursery wishes to have the birdhouses engraved with their own logo, therefore, the order would require the rental of a special engraving tool at a cost of $250. Preston requires a minimum $2,500 profit on any special order. The minimum price per birdhouse that Preston should charge the nursery is:

a. $98.75.

b. $145.00.

c. $95.00.

d. $65.00.

Reference no: EM13920911

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