Answer the following questions using the information below:
Heck's Kitchens is approached by Mr. Louis Cifer, a new customer, to fulfill a large one-time-only special order for a product similar to one offered to regular customers. The following per unit data apply for sales to regular customers:
Heck's Kitchens has excess capacity. Mr. Cifer wants the cabinets in cherry rather than oak, so direct material costs will increase by $50 per unit.
-For Heck's Kitchens, what is the minimum acceptable price of this one-time-only special order?
A)$850
B)$950
C)$805
D)$1,460

Question

Answer the following questions using the information below:
Heck's Kitchens is approached by Mr. Louis Cifer, a new customer, to fulfill a large one-time-only special order for a product similar to one offered to regular customers. The following per unit data apply for sales to regular customers:
  Heck's Kitchens has excess capacity. Mr. Cifer wants the cabinets in cherry rather than oak, so direct material costs will increase by $50 per unit.
-For Heck's Kitchens, what is the minimum acceptable price of this one-time-only special order?
A)$850 
B)$950 
C)$805 
D)$1,460

Quizplus · Accepted Answer

The minimum acceptable price is the total cost plus a 10% markup. The total cost is $850, so the minimum acceptable price is $850 + 10% of $850 = $850 + $85 = $935.

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