Gracius 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.Gracius 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:

If the European customer wanted a long-term commitment,and not a one-time-only special order,for supplying this product,calculate the most likely price to be quoted assuming the markup remains the same?
A)$110
B)$250
C)$300
D)$190

Question

Gracius 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.Gracius 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:

If the European customer wanted a long-term commitment,and not a one-time-only special order,for supplying this product,calculate the most likely price to be quoted assuming the markup remains the same?
A)$110 
B)$250 
C)$300 
D)$190

Quizplus · Accepted Answer

Long-run pricing is a strategic decision designed to build long-run relationships with customers based on stable and predictable prices.Therefore,the most likely long-term price = $300.

Gracius Manufacturing Is Approached by a European Customer to Fulfill