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What is the full cost of the product per unit

    Assignment Instructions

    Assignment ID: FG133048282

    Question – Parker and Spitzer 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 $66

    Direct labour 30

    Variable manufacturing support 48

    Fixed manufacturing support 104

    Total manufacturing costs 248

    Markup (50%) 124

    Targeted selling price $372

    Parker and Spitzer 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 Parker and Spitzer Manufacturing, what is the minimum acceptable price of this one-time-only special order?

    e. For this one-time-only special order, should Parker and Spitzer Manufacturing consider a price of 200 per unit? Why or why not?

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