Use the information below to answer the following question(s).Northwoods manufactures rustic furniture.The cost accounting system estimates manufacturing costs to be $90 per table, consisting of 80% variable costs and 20% fixed costs.The company has surplus capacity available.It is Northwoods' policy to add a 50% markup to full costs.
-Northwoods is invited to bid on a one-time-only special order to supply 100 rustic tables.What is the lowest price Northwoods should bid on this special order?
A)$6,300
B)$7,200
C)$10,800
D)$13,500
E)$9,000

Question

Quizplus · Accepted Answer

The lowest price should cover the variable costs since there is surplus capacity. Variable cost per table is 80% of $90, which is $72. For 100 tables, the total variable cost is $7,200.

Use the Information Below to Answer the Following Question(s)