Northwoods is invited to bid on a one-time-only special order to supply 200 rustic tables

ACCOUNTING

Multiple Choice

Northwoods manufactures rustic furniture. The cost accounting system estimates manufacturing costs to be $120 per table, consisting of 60% variable costs and 40% fixed costs. The company has surplus capacity available. It is Northwoods’ policy to add a 50% markup to full costs.


Northwoods is invited to bid on a one-time-only special order to supply 200 rustic tables. What is the lowest price Northwoods should bid on this special order?

a. $21,600

b. $7,200

c. $12,000

d. $14,400

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