Minimum acceptable price of special order


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

Variable costs:
Direct materials $80
Direct labor 40
Manufacturing support 70
Marketing costs 30
Fixed costs:
Manufacturing support 90
Marketing costs 30
Total costs 340
Markup (50%) 170
Targeted selling price $510

For Polar Manufacturing, what is the minimum acceptable price of this special order?

A) $220

B) $290

C) $340

D $510

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Accounting Basics: Minimum acceptable price of special order
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