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 $65 per unit. The average marketing cost of Kitchens Sales product is $175 per order. Which of the following costs is NOT considered to calculate the minimum acceptable price of a one-time-only special order?
A) marketing costs
B) direct material costs
C) indirect material costs
D) special design costs

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 $65 per unit. The average marketing cost of Kitchens Sales product is $175 per order. Which of the following costs is NOT considered to calculate the minimum acceptable price of a one-time-only special order?
A) marketing costs 
B) direct material costs 
C) indirect material costs 
D) special design costs

Quizplus · Accepted Answer

The Answer of 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 $65 per unit. The average marketing cost of Kitchens Sales product is $175 per order. Which of the following costs is NOT considered to calculate the minimum acceptable price of a one-time-only special order?
A) marketing costs 
B) direct material costs 
C) indirect material costs 
D) special design costs