Kitchens Sales Inc. is approached by Mr. Louis Cifer, a new customer, to fulfill a large one-time-only special order for a product similar to one offered to regular customers. The following per unit data apply for sales to regular customers:

Kitchens Sales Inc. has excess capacity. Mr. Cifer wants the cabinets in cherry rather than oak, so direct material costs will increase by $70 per unit. The average marketing cost of Kitchens Sales product is $173 per order. For Kitchens, what is the full cost of the one-time-only special order?
A) $1,034
B) $1,174
C) $1,104
D) $1,347

Question

Kitchens Sales Inc. is approached by Mr. Louis Cifer, a new customer, to fulfill a large one-time-only special order for a product similar to one offered to regular customers. The following per unit data apply for sales to regular customers:

Kitchens Sales Inc. has excess capacity. Mr. Cifer wants the cabinets in cherry rather than oak, so direct material costs will increase by $70 per unit. The average marketing cost of Kitchens Sales product is $173 per order. For Kitchens, what is the full cost of the one-time-only special order?
A) $1,034 
B) $1,174 
C) $1,104 
D) $1,347

Quizplus · Accepted Answer

Full cost = $556 + $362 + $60 + $126 + $70 = $1,174