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    Calculating manufacturing cost per unit, contribution per unit, which costs are relevant for making the decision, and minimum acceptable price of the special order (Truck Parts Manufacturer)

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    A Trucks Parts Manufacturer is approached by an European customer to fulfill a special one-time order for a product similar to one offered to domestic customers. Truck Parts Manufacturing has excess capactity. The following per unit data applies to sales of regular (domestic) customers:

    Direct materials $40
    Direct labor 20
    Variable manufacturing support 50
    Fixed manufacturing support 60
    Total manufacturing costs $170
    Markup (50%) 85
    Targeted selling price $255

    1) What is full manufacturing cost per unit -

    $110, 170, 255, or 85

    2) What is the contribution per unit -

    $85, 110, 145, or 255

    3) Which costs are relevant for making the decision regarding this special order -

    Full costs, Incremental costs, Targeted selling price, or It varies

    4) For Truck Parts Manufacturing, what is the minimum acceptable price of the special order -

    $110, 145, 170, or 255

    5) For this special order, Truck Parts Manufacturing should consider -

    Any price greater than $170, Any price less than $255, Any price less than $ 255 but greater than $170, or A price of $150 per unit

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    Solution Preview

    A Trucks Parts Manufacturer is approached by an European customer to fulfill a special one-time order for a product similar to one offered to domestic customers. Truck Parts Manufacturing has excess capacity. The following per unit data applies to sales of regular (domestic) customers:
    Direct materials $40
    Direct labor 20
    Variable manufacturing support 50
    Fixed manufacturing support 60
    Total ...

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