Question

Clay Co. has considerable excess manufacturing capacity. A special job order's cost sheet includes the following applied manufacturing overhead costs: Fixed costs: 21,000 Variable costs: 33,000 The fixed costs include a normal $3,700 allocation for in-house design costs, although no in-house design will be done. Instead, the job will require the use of external designers costing $7,750. What is the total amount to be included in the calculation to determine the minimum acceptable price for the job? Select one:

a. $58,050
b. $54,000
c. $40,750
d. $36,700

Answer 1

minimum acceptable price = $40,750

so correct option is c. $40,750

Step-by-step explanation:

given data

Fixed costs = 21,000

Variable costs = 33,000

The fixed costs normal = $3,700

external designers costing = $7,750

to find out

determine the minimum acceptable price

solution

we will get here minimum acceptable price will be express as

minimum acceptable price = variable costs + external designers costing .............1

put here value we get

minimum acceptable price = $33,000 + $7,750

minimum acceptable price = $40,750

so correct option is c. $40,750

we also know here that it is special order that won't affect regular sales