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Author Question: Loft Lake Cabinets is approached by Ms. Jenny Zhang, a new customer, to fulfill a large ... (Read 79 times)

Coya19@aol.com

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on: Mar 6, 2021
Loft Lake Cabinets is approached by Ms. Jenny Zhang, a new customer, to fulfill a large one-time-only special order for a product similar to one offered to regular customers. The following per unit data apply for sales to regular customers: 

Direct materials$50.00
Direct labor62.50
Variable manufacturing support30.00
Fixed manufacturing support37.50
Total manufacturing costs180.00
Markup (60%)108.00
Targeted selling price$288.00

Loft Lake Cabinets has excess capacity. Ms. Zhang wants the cabinets in cherry rather than oak, so direct material costs will increase by $15 per unit. 

Required: 
a.For Loft Lake Cabinets, what is the minimum acceptable price of this one-time-only special 
order?
b.Other than price, what other items should Loft Lake Cabinets consider before accepting this 
one-time-only special order?
c.How would the analysis differ if there was limited capacity? 
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Marked as best answer by Coya19@aol.com on Mar 6, 2021

blazinlyss

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Reply #1 on: Mar 6, 2021
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Coya19@aol.com

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Reply 2 on: Mar 6, 2021
YES! Correct, THANKS for helping me on my review

pratush dev

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Reply 3 on: Yesterday
Great answer, keep it coming :)

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