Dantley's Furniture manufactures rustic furniture. The cost accounting system estimates manufacturing costs to be $240 per table, consisting of 75% variable costs and 25% fixed costs. The company has surplus capacity available. It is Back Forrest's policy to add a 45% markup to full costs. A large hotel chain is currently expanding and has decided to decorate all new hotels using the rustic style. Dantley's Furniture Incorporated is invited to submit a bid to the hotel chain. What is the lowest price per unit Dantley's Furniture should bid on this long-term order?
A) $168
B) $180
C) $240
D) $348

Question

Quizplus · Accepted Answer

$240 + ($240 × 45%) = $348

Dantley's Furniture Manufactures Rustic Furniture