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2) Parker and Spitzer Manufacturing is approached by a European customer to fulfill a one-time-only...

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Accounting

2) Parker and Spitzer 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. The following per unit data apply for sales to regular customers:

Direct materials $66

Direct labour 30

Variable manufacturing support 48

Fixed manufacturing support 104

Total manufacturing costs 248

Markup (50%) 124

Targeted selling price $372

Parker and Spitzer Manufacturing has excess capacity.

Required:

a. What is the full cost of the product per unit?

b. What is the contribution margin per unit?

c. Which costs are relevant for making the decision regarding this one-time-only special order? Why?

d. For Parker and Spitzer Manufacturing, what is the minimum acceptable price of this one-time-only special order?

e. For this one-time-only special order, should Parker and Spitzer Manufacturing consider a price of 200 per unit? Why or why not?

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