Question
In: Accounting
Brayton Inc. is a manufacturer of generators. Recently, the company was approached by a new customer...
Brayton Inc. is a manufacturer of generators. Recently, the company was approached by a new customer with a request for a one-time only special. The customer would like to buy 3,000 units of Brayton's generators. Although Brayton can produce 15,000 generators, actual production is 12,000.
The following is per unit data for sales to regular customers:
Direct materials: $1,275
Direct labor: $75
Variable overhead: $150
Fixed overhead: $120
Total Manufacturing Costs: $1,620
Markup (15%): $243
Estimated selling price: $1,863
Required:
(A) What is the minimum acceptable price of this one-time-only special order?
(B) Before accepting the one-time-only special order, what non-financial factors should Brayton consider?
(C) Now, assume that Brayton Inc. is operating at maximum capacity (i.e., producing 15,000 units) when management is asked to fulfill the special order. What would be the minimum acceptable price of this special order?
(D) If the customer wanted to form a long-term commitment for purchasing generators, what price should Brayton quote to the customer?
Solutions
ekkarill92 answered 2 years agoRelated Solutions
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