Reference no: EM132543120

Delgreco Products manufactures high-tech cell phones. Delgreco Products has a policy of adding a 30% markup to full costs and currently has excess capacity.

The following information pertains to the company's normal operations per month:

Output units'                                               10,000 phones

Machine-hours                                                8,000 hours

Direct manufacturing labor-hours                    5,000 hours

Direct materials per unit                                        $25

Direct manufacturing labor per hour                         $15

Variable manufacturing overhead costs               $175,000

Fixed manufacturing overhead costs                  $425,000

Fixed Product and process design costs              $400,000

Fixed Marketing and distribution costs                   $475,000

Delgreco Products is approached by an overseas customer to fulfill a one-time-only special order for 1,000 units. All cost relationships remain the same except for a one-time setup charge of $15,000. No additional design, marketing, or distribution costs will be incurred.

Required:

Question 1: What is the minimum acceptable bid per unit on this one-time-only special order?

Question 2: What other factors should the company consider before accepting or rejecting the special order?