Zolas' Heaters Is Approached by Ms For Zolas' Heaters,what Is the Minimum Acceptable Price of This

question 146

Multiple Choice

Zolas' Heaters is approached by Ms.Leila,a new customer,to fulfill a large one-time-only special order for a product similar to one offered to regular customers.Zolas' Heaters has excess capacity.The following per unit data apply for sales to regular customers:
$\begin{array}{ll}\text { Direct materials } & \$ 450.00 \\\text { Direct manufacturing labor } & 160.00 \\\text { Variable manufacturing support } & 100.00 \\\text { Fixed manufacturing support } & \underline{210.00} \\\quad \text { Total manufacturing costs } & 920.00 \\\text { Markup (25\% of total manufacturing costs) } & \underline{230.00} \\\text { Estimated selling price } & \$ 1150.00 \\\end{array}$
For Zolas' Heaters,what is the minimum acceptable price of this one-time-only special order?

• A)$710.00
• B)$920.00
• C)$610.00
• D)$1150.00

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Definitions:

Price-taking Behavior

Describes individuals or companies that accept market prices as given because they have no power to influence those prices.

Pure Competition

A market structure characterized by many buyers and sellers, homogenous products, and no barriers to entry or exit, leading to efficient outcomes.

Market Model

A theoretical construct that describes the workings of a market through a set of mathematical equations or principles, aiming to predict the outcome of market forces.

Price

The price associated with purchasing a good, service, or asset.