Author Question: Golden Generator Supply is approached by Mr. Stephen, a new customer, to fulfill a large ... (Read 90 times)

asmith134 · **on:** Mar 6, 2021

Question 1

For long-run pricing decisions, using stable prices has the advantage of ________.
◦ minimizing the need to monitor competitor's prices frequently
◦ reducing the need to change cost structures frequently
◦ reducing competition
◦ helping to build buyer-seller relationships

Question 2

Golden Generator Supply is approached by Mr. Stephen, a new customer, to fulfill a large one-time-only special order for a product similar to one offered to regular customers. Golden Generator Supply has excess capacity. The following per unit data apply for sales to regular customers:

Direct materials

$190

Direct manufacturing labor

180

Variable manufacturing support

280

Fixed manufacturing support

140

Total manufacturing costs

790

Markup (10% of total manufacturing costs)

79

Estimated selling price

$869

If Mr. Stephen 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?
◦ $650
◦ $790
◦ $869
◦ $370

jasonq · **Reply #1 on:** Mar 6, 2021

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