Question

Quick Connect manufactures high-tech cell phones. Quick Connect has a policy of adding a 25% markup to full costs and currently has excess capacity. The following information pertains to the company's normal operations per month: Output units 1500 phones Machine-hours 1100 hours Direct manufacturing labor-hours 1200 hours Direct materials per unit $23 Direct manufacturing labor per hour $9 Variable manufacturing overhead costs $214,500 Fixed manufacturing overhead costs $126,700 Product and process design costs $143,400 Marketing and distribution costs $154,045 Quick Connect Products is approached by an overseas customer to fulfill a one-time-only special order for 150 units. All cost relationships remain the same except for a one-time setup charge of $2025. No additional design, marketing, or distribution costs will be incurred. What is the minimum acceptable bid per unit on this one-time-only special order

Answer 1

Answer: $186.70

Step-by-step explanation:

The minimum acceptable bid per unit on this one-time-only special order will be calculated as:

Direct material per unit = $23

Add: Direct labor (1200/1500) × $9 = $7.2

Add: Variable manufacturing overhead ($214500/$1500) = $143

Add: Special charge (2025/150) = $13.5

Minimum price = $23 + $7.2 + $143 + $13.5 = $186.70