Parker and Spitzer Manufacturing Is Approached by a European Customer

question 59

Essay

Parker and Spitzer Manufacturing is approached by a European customer to fulfill a one-time-only special order for a product similar to one offered to domestic customers.The following per unit data apply for sales to regular customers:
$\begin{array}{lr}\text { Direct materials } & \$ 1,782 \\\text { Direct labor } & 810 \\\text { Variable manufacturing support } & 1,296 \\\text { Fixed manufacturing support } & 2,808 \\\quad \text { Total manufacturing costs } & 6,696 \\\text { Markup (50\%) } & 3,348 \\\text { Targeted æelling price } & \$ 10,044\end{array}$ Parker and Spitzer Manufacturing has excess capacity.
Required:
a.What is the full cost of the product per unit if the marketing costs is $3,000?
b.What is the contribution margin per unit?
c.Which costs are relevant for making the decision regarding this one-time-only special order? Why?
d.For Parker and Spitzer Manufacturing,what is the minimum acceptable price of this one-time-only special order?
e.For this one-time-only special order,should Parker and Spitzer Manufacturing consider a price of $5,400 per unit? Why or why not?