Answer the Following Questions Using the Information Below:
Eucalyptus Products

question 147

Multiple Choice

Answer the following questions using the information below:
Eucalyptus Products manufactures office desks.Eucalyptus Products has a policy of adding a 20% mark-up to full costs and currently has excess capacity.The following information pertains to the company's normal operations per month:
$$\begin{array} { l r l } \text { Output units } & 30000 & \text { tables } \\\text { Machine-hours } & 8000 \text { hours } \\\text { Direct manufacturing labour-hours } & 10000 \text { hours } \\& & \\\text { Direct materials per unit } & \$ 50 \\\text { Direct manufacturing labour per hour } & \$ 6 \\\text { Variable manufacturing overhead costs } & \$ 161250 \\\text { Fixed manufacturing overhead costs } & \$ 600000 \\\text { Product and process design costs } & \$ 450000 \\\text { Marketing and distribution costs } & \$ 562500\end{array}$$
-Eucalyptus Products is approached by an overseas customer to fulfil a one-time-only special order for 2000 units.All cost relationships remain the same except for a one-time set-up charge of $20 000.No additional design,marketing,or distribution costs will be incurred.What is the minimum acceptable bid per unit on this one-time-only special order?

• A)$67.38
• B)$80.85
• C)$111.13
• D)$77.38

---

Definitions:

Cost Behavior Analysis

The study of how specific costs respond to changes in the level of business activity.

Activity Base

A measure used in costing that is a significant and quantifiable activity or event, determining the cost incurred by an activity.

Level Of Activity

A measure of the volume of production or work that a business operates at, which can affect costs and efficiency.

Variable Costs

Expenses that vary directly with the amount of production or the degree of business operations.