Answer the Following Questions Using the Information Below

question 181

Multiple Choice

Answer the following questions using the information below:
Weather Inc., manufactures single room sized air conditioners. The cost accounting system estimates manufacturing costs to be $190 per air conditioner, consisting of 75% variable costs and 25% fixed costs. The company has surplus capacity available. It is Weather Inc.'s policy to add a 30% markup to full costs.
-Weather Inc.,is invited to bid on a one-time-only special order to supply 100 air conditioners.What is the lowest price Weather Inc.should bid on this special order?

• A) $14,250
• B) $18,525
• C) $25,000
• D) $24,700

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Definitions:

Social Regulation

Rules and policies designed to correct market failures that affect people's health, safety, welfare, and social wellbeing.

Administrative Costs

Administrative Costs are expenses related to the general operation of a business, including expenses such as office supplies, salaries of non-production employees, and legal and accounting services.

Compliance Costs

Expenses that businesses incur to adhere to industry regulations, standards, and laws, including the costs of implementing necessary procedures and reporting.

Horizontal Price-fixing

An illegal agreement between competitors to fix, raise, or lower prices of goods or services at a certain level, stifling competition.