Gracius 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.Gracius Manufacturing has a policy of adding a 10% markup to full costs and currently has excess capacity.The following per unit data apply for sales to regular customers: $\begin{array}{l}
\text { Varible costs: }\
\begin{array}{lr}
\text { Direct materials } & \$ 30 \
\text { Direct labor } & 10 \
\text { Manufacturing overhead } & 20 \
\text { Marketing costs } & 10\
\text { Fixed costs: }\
\text { Manufacturing overhead }& 100 \
\text { Marketing costs } & 190 \
\text { Total costs } & 190 \
\text { Markup ( } 10 \% \text { of total costs) } & 1909 \
\text { Estimated ælling price } & \$ 20
\end{array}
\end{array}$ If the European customer wanted a long-term commitment,and not a one-time-only special order,for supplying this product,calculate the most likely price to be quoted assuming the markup remains same?
A) $70.00
B) $190.00
C) $209.00
D) $239.00

Question

Quizplus · Accepted Answer

The markup is 10% of total costs. The total costs for the regular customers are $190. Therefore, the markup is $19. The selling price for the regular customers is $209. If the European customer wanted a long-term commitment, the markup would remain the same. Therefore, the selling price for the European customer would be $209.

Gracius Manufacturing Is Approached by a European Customer to Fulfill