Fuller Company Makes Frames

question 5

Multiple Choice

Fuller Company makes frames.A customer wants to place a special order for 600 frames in green with the company logo painted on the frame, to be priced at $40 each.Normally, Fuller would charge $90 per frame for this type of order.Fuller figures that wood and glass will cost $16 per frame, variable overhead (machining, electricity) is $4 per frame, direct labor is $12 per frame, and one setup will be required at $1,000 per setup.The set-up charge costs are 100% labor.Currently, the workers needed to set up for and make the frames are working at Fuller.Their wages will be paid whether or not the special order is accepted.Fuller's policy is to avoid layoffs to the extent possible.
-Which costs of the special order relate to flexible resources?

• A) wood and glass
• B) wood, glass, and variable overhead
• C) depreciation on machinery
• D) wood, glass, and direct labor
• E) wood, glass, direct labor, and setup labor

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Definitions:

Market Share

The portion of a market controlled by a particular company or product, often expressed as a percentage.

Marketing Mix

A set of actions, or tactics, that a company uses to promote its brand or product in the market, traditionally defined as the 4Ps: Product, Price, Place, and Promotion.

Place

In marketing, refers to the distribution aspect and how and where products are made available to consumers.

Outlets

Retail stores that sell goods directly from manufacturers at discounted prices, often merchandise that is overstocked or discontinued.