Full cost of the product per unit, Finance Basics

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Full cost of the product per unit

Axle and Wheel 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. The following per unit data apply for sales to regular customers:

Direct materials$33

Direct labor15

Variable manufacturing support24

Fixed manufacturing support52

Total manufacturing costs124

Markup (50%)62

Targeted selling price$186

Axle and Wheel Manufacturing has excess capacity.

Required:

a. What is the full cost of the product per unit?

b. What is the contribution margin per unit?

c. Which costs are relevant for making the decision regarding this one-time-only special order? Why?

d. For Axle and Wheel Manufacturing, what is the minimum acceptable price of this one-time-only special order?

e. For this one-time-only special order, should Axle and Wheel Manufacturing consider a price of $100 per unit? Why or why not?

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Finance Basics: Full cost of the product per unit

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Finance Basics: Full cost of the product per unit

Reference No:- TGS042680

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Recent Questions Asked Finance Basics

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Request for Solution File

Ask an Expert for Answer!!

Finance Basics: Full cost of the product per unit

Reference No:- TGS042680

Recent Questions Asked Finance Basics

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Q : Scope limitation sufficient to preclude

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