If the European customer wanted a long-term commitment for supplying this product, what price would MOST likely be quoted?

ACCOUNTING

Multiple Choice

Welch 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. Welch Manufacturing has a policy of adding a 10% markup to full costs and currently has excess capacity. The following per unit data apply for sales to regular customers:



Variable costs:

Direct materials $30

Direct labor 10

Manufacturing overhead 15

Marketing costs 5

Fixed costs:

Manufacturing overhead 100

Marketing costs 20

Total costs 180

Markup (10%) 18

Estimated selling price $198



If the European customer wanted a long-term commitment for supplying this product, what price would MOST likely be quoted?

a. $66.00

b. $180.00

c. $198.00

d. $217.80

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