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What is the minimum acceptable price

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Question - Jeremy's Desks is approached by Mr. Harry Hood, a new customer, to fulfill a large one-time-only special order for a product similar to one offered to regular customers. The following per unit data apply for sales to regular customers:

Direct materials $455

Direct labor 300

Variable manufacturing support 45

Fixed manufacturing support 100

Total manufacturing costs 900

Markup (60%) 540

Targeted selling price $1440

Jeremy's Desks has excess capacity. Mr. Hood wants the desks in bamboo rather than maple, so direct material costs will increase by $30 per unit.

For Jeremy's Desks, what is the minimum acceptable price of this one-time-only special order?

Reference no: EM131806813

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