12 2 evaluate existing information to decide on a competitive price for a special or 4302799
12.2 Evaluate existing information to decide on a competitive price for a special order.
1) Special orders increase income if the revenue from the order exceeds the incremental variable and fixed costs incurred to fill the order.
2) In deciding whether to accept a special sales order, any fixed costs that would remain unchanged are considered irrelevant data.
3) A pricebidding decision for a onetimeonly special order includes an analysis of
A) only marketing costs.
B) all cost drivers.
C) all costs of each function in the value chain.
D) only fixed manufacturing costs.
E) indirect costs of each category in the value chain.
4) Decisions on the price to bid on a onetimeonly special order should include
A) only cost data.
B) only the potential bids of competitors.
C) existing fixed manufacturing overhead.
D) cost data, and the use of variable costing income statements.
E) cost data and potential bids of competitors.
5) Your company produces 700,000 widgets per year but has the capacity to produce 950,000 units. Company records show the following; full product costs = $85 per unit, which includes fixed manufacturing overhead of $11, and variable overhead of $4 per unit, and direct variable costs of $22, all based on the current 700,000 production run. If the company wanted to bid on a special onetime order, based on the above information only, what would be its minimum bid?
A) $59
B) $81
C) $63
D) $74
E) $85
Use the information below to answer the following question(s).
Action Mopeds manufactures mopeds. The following information pertains to the company's normal operations per month:
Output units 
15,000 mopeds 
Machinehours 
4,000 hours 
Direct manufacturing labour hours 
5,000 hours 
Direct manufacturing labour per hour 
$24 
Direct materials per unit 
$200 
Variable manufacturing overhead costs 
$322,500 
Fixed costs: 

Fixed manufacturing overhead costs 
$1,200,000 
Marketing and distribution costs 
$1,125,000 
Research and development costs 
$900,000 
6) What is the unit cost for establishing a minimum bid on a onetimeonly special order of 1,000 mopeds from an overseas city if all cost relationships remain the same except for a onetime setup charge of $40,000?
A) $269.50
B) $309.50
C) $444.50
D) $260.50
E) $209.50
7) What is the unit cost when establishing a longrun price for mopeds?
A) $309.50
B) $325.48
C) $444.50
D) $460.50
E) $470.00
Answer the following question(s) using the information below.
Rogers' Heaters is approached by Ms. Yukki, a new customer, to fulfill a large onetimeonly special order for a product similar to one offered to regular customers. Rogers' Heaters has excess capacity. The following per unit data apply for sales to regular customers:
Direct materials 
$200 
Direct manufacturing labour 
60 
Variable manufacturing support 
30 
Fixed manufacturing support 
100 
Total manufacturing costs 
390 
Markup (30%) 
117 
Estimated selling price 
$507 
8) For Rogers' Heaters, what is the minimum acceptable price of this onetimeonly special order?
A) $290
B) $390
C) $260
D) $507
E) $377
9) If Ms. Yukki wanted a longterm commitment for supplying this product, what price would most likely be quoted to her?
A) $290
B) $390
C) $260
D) $377
E) $507
Answer the following question(s) using the information below.
Gerry's Generator Supply is approached by Mr. Gladstone, a new customer, to fulfill a large onetimeonly special order for a product similar to one offered to regular customers. Gerry's Generator Supply has excess capacity. The following per unit data apply for sales to regular customers:
Direct materials 
$850 
Direct manufacturing labour 
50 
Variable manufacturing support 
100 
Fixed manufacturing support 
75 
Total manufacturing costs 
1,075 
Markup (20%) 
215 
Estimated selling price 
$1,290 
10) For Gerry's Generators, what is the minimum acceptable price of this onetimeonly special order?
A) $900
B) $1,000
C) $1,075
D) $1,290
E) $1,200