Answer the Following Questions Using the Information Below:
Rockhampton Manufacturing

question 117

Multiple Choice

Answer the following questions using the information below:
Rockhampton Manufacturing is approached by a Brazilian customer to fulfil a one-time-only special order for a product similar to one offered to domestic customers. Rockhampton Manufacturing has a policy of adding a 10% mark-up to full costs and currently has excess capacity. The following per unit data apply for sales to regular customers:
$\begin{array}{lr}\text {Variable costs:}\\\text { Direct materials } & \$ 30 \\\text { Direct labour } & 10 \\\text { Manufacturing overhead } & 15 \\\text { Marketing costs } & 5\\\text { Fixed costs: }\\\quad \text { Manufacturing overhead } & 100 \\\quad \text { Marketing costs } & \underline{20} \\\text { Total costs } & 180 \\\text { Mark-up }(10 \%) & 18 \\\text { Estimated selling price } & \underline{ \$ 198}\end{array}$

-If the Brazilian customer wanted a long-term commitment for supplying this product,what price would MOST likely be quoted?

• A)$180.00
• B)$217.80
• C)$198.00
• D)$66.00

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