We appreciate your visit to Cool Systems manufactures single room sized air conditioners The cost accounting system estimates manufacturing costs to be 190 per air conditioner consisting of 75 variable. This page offers clear insights and highlights the essential aspects of the topic. Our goal is to provide a helpful and engaging learning experience. Explore the content and find the answers you need!
Answer :
Cool Systems is expected to bid $185.25 per unit for the special order of 50 air conditioners, calculated using variable cost and added markup per company policy.
Cool Systems is analyzing a bid for a special order of 50 air conditioners. Given the manufacturing cost is $190 per unit with a mix of fixed and variable costs, and considering the surplus capacity, it is likely the bid will only include the variable costs plus the markup when calculating the special order price. The variable cost is 75% of the full cost, so the variable cost per air conditioner is $142.50 (75% of $190). With a policy to add a 30% markup to full costs, the markup on the variable cost would be $42.75 (30% of $142.50). Thus, the likely bid price per unit for this special order would be $185.25 ($142.50 variable cost + $42.75 markup).
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