What is the minimum acceptable price of the special order

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Reference no: EM132610329

Welch 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. Welch Manufacturing has excess capacity. The following per unit data apply for sales to regular customers:

Variable costs:

Direct materials $40
Direct labor 20
Manufacturing support 35
Marketing costs 15
Fixed costs:
Manufacturing support 45
Marketing costs 15
Total costs 170
Markup (50%) 85
Targeted selling price $255

Question i. What is the full cost of the product per unit?

Question ii. What is the contribution margin per unit?

Question iii. For Welch Manufacturing, what is the minimum acceptable price of this special order?

Question iv. What is the change in operating profits if the 1,000 unit one-time-only special order is accepted for $180 a unit by Welch?

Reference no: EM132610329

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