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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)

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

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 ...

Solution Summary

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$2.19