Answer the following question(s)using the information below.Welch 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.Welch Manufacturing has excess capacity.The following per unit data apply for sales to regular customers:

-What is the full cost of the product per unit?
A)$110
B)$170
C)$255
D)$95
E)$140

Question

Answer the following question(s)using the information below.Welch 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.Welch Manufacturing has excess capacity.The following per unit data apply for sales to regular customers:
 
-What is the full cost of the product per unit?
A)$110 
B)$170 
C)$255 
D)$95 
E)$140

Quizplus · Accepted Answer

The full cost per unit is calculated as follows:
Direct Materials + Direct Labor + Manufacturing Overhead + Selling & Administrative Expenses = Full Cost
$30 + $50 + ($70 + $25) = $175
Since Welch Manufacturing has excess capacity, they can afford to offer a special price to the European customer. Assuming they want to make a profit on the order, they could offer a price of $170 per unit (which is lower than the full cost per unit of $175). Therefore, the best choice is B.

Answer the Following Question(s)using the Information Below