Answer the Following Questions Using the Information Below:
Grant's Cakes

question 41

Multiple Choice

Answer the following questions using the information below:
Grant's Cakes is approached by Ms Tammy Wang,a new customer,to fulfil 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:
$$\begin{array} { l r } \text { Direct materials } & \$ 455 \\\text { Direct labour } & 300 \\\text { Variable manufacturing support } & 45 \\\text { Fixed manufacturing support } & 100 \\\text { Total manufacturing costs } & 900 \\\text { Mark-up (60\%) } & \underline { 540 } \\\text { Targeted selling price } & \$ 1440\end{array}$$ Grant's Kitchens has excess capacity.Ms Wang wants layered cream cheese pound cakes rather than plain pound cakes,so direct material costs will increase by $30 per unit.
-Other than price,what other items should Grant's Cakes consider before accepting this one-time-only special order?

• A)Price is the only consideration
• B)Demand for cherry cabinets
• C)Reaction of shareholders
• D)Reaction of existing customers to the lower price offered to Ms Wang

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