Answer the following questions using the information below:
Black Forrest manufactures rustic furniture. The cost accounting system estimates manufacturing costs to be $180 per table, consisting of 80% variable costs and 20% fixed costs. The company has surplus capacity available. It is Back Forrest's policy to add a 50% markup to full costs.
-Black Forrest is invited to bid on a one-time-only special order to supply 100 rustic tables.What is the lowest price Black Forrest should bid on this special order?
A) $12,600
B) $14,400
C) $18,000
D) $23,000

Question

Quizplus · Accepted Answer

The lowest price should cover the variable costs since there is surplus capacity. Variable cost per table is 80% of $180, which is $144. For 100 tables, the total variable cost is $14,400.

Answer the Following Questions Using the Information Below