Swan Manufacturing Is Approached by a Customer to Fulfill a One-Time-Only

question 137

Essay

Swan Manufacturing is approached by a customer to fulfill a one-time-only special order for a product similar to one offered to domestic customers. The following per unit data apply for sales to regular customers:

Swan Manufacturing has excess capacity.
Required:
a.What is the full cost of the product per unit if the marketing costs is $3,000?
b.What is the contribution margin per unit?
c.Which costs are relevant for making the decision regarding this one-time-only special order? Why?
d.For Swan Manufacturing, what is the minimum acceptable price of this one-time-only special order?
e.For this one-time-only special order, should Parker and Spitzer Manufacturing consider a price of $5,400 per unit? Why or why not?

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Definitions:

Host-Country Nationals

Employees who are natives of the host country.

Labour Costs

The total sum of all financial expenses associated with the employment of workers, including wages, benefits, and taxes.

Domestic Firm

A company that operates primarily within the borders of its home country and caters to the local market.

Overseas Markets

Overseas Markets denote the markets located outside the country of origin where goods, services, and investments are traded.