Answer the following questions using the information below:
Marcia 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. Marcia Manufacturing has a policy of adding a 20% markup to full costs and currently has excess capacity. The following per unit data apply for sales to regular customers:

-If the European customer wanted a long-term commitment for supplying this product, what price would most likely be quoted?
A)$66.00
B)$180.00
C)$216.00
D)$236.00

Question

Answer the following questions using the information below:
Marcia 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. Marcia Manufacturing has a policy of adding a 20% markup to full costs and currently has excess capacity. The following per unit data apply for sales to regular customers:
 
-If the European customer wanted a long-term commitment for supplying this product, what price would most likely be quoted?
A)$66.00 
B)$180.00 
C)$216.00 
D)$236.00

Quizplus · Accepted Answer

Marcia Manufacturing adds a 20% markup to full costs for sales to regular customers. Therefore, the full cost per unit for this product is $180 ($150 + $20 + $10). Adding a 20% markup to the full cost gives a selling price of $216 per unit. Since the European customer wants a long-term commitment for supplying this product, Marcia Manufacturing would most likely quote a price close to the full cost to ensure profitability over the long run. Therefore, the most likely price to be quoted would be $216 per unit.

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