Jack's Back Porch manufactures rustic furniture. The cost accounting system estimates manufacturing costs to be $300 per table, consisting of 60% variable costs and 40% fixed costs. The company has surplus capacity available. It is Jack's Back Porch's policy to add a 70% markup to full costs.
Jack's Back Porch is invited to bid on a one-time-only special order to supply 150 rustic tables. What is the lowest price Jack's Back Porch should bid on this special order?
A) $45,000
B) $18,000
C) $27,000
D) $76,500

Question

Quizplus · Accepted Answer

Lowest price = 150 × ($300 × 60%) = $27,000.

Jack's Back Porch Manufactures Rustic Furniture