Answer the following questions using the information below:
Weather Inc., manufactures single room sized air conditioners. The cost accounting system estimates manufacturing costs to be $190 per air conditioner, consisting of 75% variable costs and 25% fixed costs. The company has surplus capacity available. It is Weather Inc.'s policy to add a 30% markup to full costs.
-Weather Inc.,is invited to bid on a one-time-only special order to supply 100 air conditioners.What is the lowest price Weather Inc.should bid on this special order?
A) $14,250
B) $18,525
C) $25,000
D) $24,700

Question

Quizplus · Accepted Answer

The lowest price Weather Inc. should bid on this special order is $14,250. This is because the company has surplus capacity available, so it does not need to cover fixed costs on this order. The variable cost per air conditioner is $190 * 75% = $142.50. The markup is 30% of full costs, which is $142.50 * 1.30 = $185.25. The total price per air conditioner is $142.50 + $185.25 = $327.75. The total price for 100 air conditioners is $327.75 * 100 = $14,250.

Answer the Following Questions Using the Information Below