Answer the following questions using the information below:
Marcia Manufacturing is approached by a European customer to fulfill a one-time-only special order for a product similar to one offered to domestic customers. Marcia Manufacturing has a policy of adding a 20% markup to full costs and currently has excess capacity. The following per unit data apply for sales to regular customers:

-For Marcia Manufacturing, what is the minimum acceptable price of this one-time-only special order?
A)$40
B)$55
C)$60
D)$66

Question

Answer the following questions using the information below:
Marcia Manufacturing is approached by a European customer to fulfill a one-time-only special order for a product similar to one offered to domestic customers. Marcia Manufacturing has a policy of adding a 20% markup to full costs and currently has excess capacity. The following per unit data apply for sales to regular customers:
 
-For Marcia Manufacturing, what is the minimum acceptable price of this one-time-only special order?
A)$40 
B)$55 
C)$60 
D)$66

Quizplus · Accepted Answer

The minimum acceptable price is the variable cost plus a markup to cover fixed costs. The variable cost is $40, and the markup is $20 ($60 - $40).

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