Cool Air? Inc., manufactures single room sized air conditioners. The cost accoun
ID: 2527426 • Letter: C
Question
Cool Air? Inc., manufactures single room sized air conditioners. The cost accounting system estimates manufacturing costs to be $230 per air? conditioner, consisting of 80?% variable costs and 20?% fixed costs. The company has surplus capacity available. It is Cool Air? Inc.'s policy to add a 25?% markup to full costs. Cool Air? Inc., is invited to bid on a oneminus?timeminus?only special order to supply 150 air conditioners. What is the lowest price Cool Air Inc. should bid on this special? order
34500
41400
27600
43125
Explanation / Answer
C. $27,600
The lowest price Cool Air Inc. should bid on this special? order is:
= $230 * 80% * 150 air conditioners
= $27,600