Quick Connect Manufactures High-Tech Cell Phones Quick Connect Products Is Approached by an Overseas Customer to of Adding

question 169

Multiple Choice

Quick Connect manufactures high-tech cell phones.Quick Connect has a policy of adding a 20% markup to full costs and currently has excess capacity.The following information pertains to the company's normal operations per month: $\begin{array}{lr}\text { Output units } & 1,250 \text { phones } \\\text { Machine-hours } & 750 \text { hours } \\\text { Direct manufacturing labor-hours } & 700 \text { hours }\\\\\text { Direct materials per unit } & \$ 20 \\\text { Direct manufacturing labor per hour } & \$ 8 \\\text { Variable manufacturing overhead costs } & \$ 175,000,00 \\\text { Fixed manufacturing overhead costs } & \$ 126,300 \\\text { Product and process design costs } & \$ 143,000 \\\text { Marketing and distribution costs } & \$ 153,645\end{array}$ Quick Connect Products is approached by an overseas customer to fulfill a one-time-only special order for 120 units.All cost relationships remain the same except for a one-time setup charge of $1,500.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) $24.48
• B) $160.48
• C) $176.98
• D) $200.00

---

Definitions:

Produce

To create or manufacture goods and services for consumer use, often involving a combination of raw materials, labor, and machinery.

Leave the Industry

The process by which firms exit a market or cease operations, often due to unfavorable market conditions or insufficient profits.

Average Variable Cost

The total variable cost divided by the quantity of output produced, representing the variable cost per unit of output.

Shutdown Point

The level of output and price at which a firm's total revenue just covers its variable costs; below this point, the firm would cease production.