Solution-What is the minimum acceptable bid per unit

What is the minimum acceptable bid per unit

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Reference no: EM133121470

Question - Grounded Coffee Products manufactures coffee tables. Grounded Coffee Products has a policy of adding a? 10% markup to full costs and currently has excess capacity. The following information pertains to the? company's normal operations per? month:

Output units	?20,000 tables
?Machine-hours	?6,000 hours
Direct manufacturing? labor-hours	?14,000 hours
Direct materials per unit	?$140
Direct manufacturing labor per hour	?$20
Variable manufacturing overhead costs	?$360,000
Fixed manufacturing overhead costs	?$1,500,000
Product and process design costs	?$1,400,000
Marketing and distribution costs	?$1,000,000

Grounded Coffee Products is approached by an overseas customer to fulfill a? one-time-only special order for? 5,000 units. All cost relationships remain the same except for a? one-time setup charge of? $60,000. No additional? design, marketing, or distribution costs will be incurred. What is the minimum acceptable bid per unit on this? one-time-only special? order?

A. ?$172

B. ?$184

C. ?$484

D. ?$238

Reverse engineering has the objective of reducing costs while still satisfying customer needs.

Reference no: EM133121470

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What is the minimum acceptable bid per unit

Reference no: EM133121470

Reference no: EM133121470

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