Question :
11) If Mr. Gladstone wanted a long-term commitment for supplying : 1186003
11) If Mr. Gladstone wanted a long-term commitment for supplying this product, what price would most likely be quoted to him?
A) $1,000
B) $1,200
C) $1,290
D) $1,400
E) $1,075
Answer the following question(s) using the information below.
Welch 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. Welch Manufacturing has a policy of adding a 10% markup to full costs and currently has excess capacity. The following per unit data apply for sales to regular customers:
Variable costs:
Direct materials
$30
Direct labour
10
Manufacturing overhead
15
Marketing costs
5
Fixed costs:
Manufacturing overhead
100
Marketing costs
20
Total costs
180
Markup (10%)
18
Estimated selling price
$198
12) For Welch Manufacturing, what is the minimum acceptable price of this one-time-only special order?
A) $40
B) $55
C) $60
D) $66
E) $86
13) What is the full cost of the product per unit?
A) $60
B) $180
C) $198
D) $66
E) $155
14) If the European customer wanted a long-term commitment for supplying this product, what price would most likely be quoted?
A) $66
B) $180
C) $155
D) $217
E) $198
15) Schlickau Company manufactures basketball backboards. The following information pertains to the
company’s normal operations per month:
Output units15,000 boards
Machine-hours4,000 hours
Direct manufacturing labour-hours5,000 hours
Direct manufacturing labour per hour$12
Direct materials per unit$100
Variable manufacturing overhead costs$150,000
Fixed manufacturing overhead costs $300,000
Product and process design costs$200,000
Marketing and distribution costs$250,000
Required:
a.For long-run pricing, what is the full-cost base per unit?
b.Schlickau Company is approached by an overseas city to fulfill a one-time-only special order for 1,000 units. All cost relationships remain the same except for an additional one-time setup charge of $40,000. No additional design, marketing, or distribution costs will be incurred. What is the minimum acceptable bid per unit on this one-time-only special order?
16) Muskoka Travel offers guided tours through the lake system. Muskoka Travel provides a guide, necessary equipment, and food for a fee of $75 per person per day. Currently the company is providing an average of 600 guide-days per month. Based on available equipment and guides the maximum capacity is 950 guide-days (customers taken on the equivalent of an all day tour) per month.
Variable costs per guide-day for the year were as follows:
Food$7.50Guide’s salary$37.50
Supplies3.00Insurance12.00
Fixed costs per month during the year were as follows:
Equipment rental$7,500Marketing$3,000
Administration6,000Customer service1,500
Required:
A group of foreign tourists has offered Muskoka Travel a proposal of 300 guide-days in July if they will cut the fee to $67.50 per guide-day. They have their own food and do not want to use the Muskoka Travel menus. Muskoka Travel will incur $300 in additional costs for busing the tourists back and forth to the camp site. If fixed costs would not increase, should Muskoka Travel accept the special offer?
0
zqeaiqpkmemnxy
