Hotel Furniture Surplus
Posted in Hotel Furnishings on 04/10/2010 11:43 pm by admin
Managerial Accounting Question?
I had this question on a test, I chose 7,200 and 72/unit. Did I get it right or am I missing something here?
24.Northwoods manufactures rustic furniture. The cost accounting system estimates manufacturing costs to be $90 per table, consisting of 80% variable costs and 20% fixed costs. The company has surplus capacity available. It is the company’s policy to add a 50% markup to full costs. The company is invited to bid on a one-time special order to supply 100 rustic tables. What is the lowers price Northwoods should bid on this special order?
a.$6,300
b.$7,200
c.$9,000
d.$13,500
25.Using the above date, a large hotel chain is currently expanding and has decided to decorate all new hotels using the rustic style. Northwoods is invited to submit a bid to the hotel chain. What is the lowest price per unit Northwoods should bid on this long-term order?
a.$63
b.$72
c.$90
d.$135
Answer:
24. b
25. b
Minimum price should be the sum of all variable manufacturing cost components.
Hotel Surplus Outlet “The Hunter” TV Commercial
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