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.
-A medium sized motel chain is currently expanding and has decided to create more rooms and air condition all of its rooms,which are currently not air conditioned.Weather Inc.is invited to submit a bid to the motel chain.What per unit price will Weather Inc.most likely bid for this special order of 200 units? Assume that the price is being fixed for a long-term commitment.
A) $190.00 per unit
B) $142.50 per unit
C) $247.00 per unit
D) $230.00 per unit

Question

Quizplus · Accepted Answer

Weather Inc. will most likely bid $247.00 per unit for this special order of 200 units. This is because the company has surplus capacity available and is adding a 30% markup to full costs. The full cost of each air conditioner is $190, so the markup is $57 ($190 x 30%). The total price per unit is $247 ($190 + $57).

Answer the Following Questions Using the Information Below