Clayton Manufacturing is approached by a European customer to fulfill a one-time-only special order for...
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Clayton 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. Clayton 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:
Variable costs:
Direct materials $50
Direct labor 30
Manufacturing overhead 10
Marketing costs 20
Fixed costs:
Manufacturing overhead 110
Marketing costs 30
Total costs 250
Markup (20% of total costs) 50
Estimated selling price $300
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?
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