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11 January, 14:23

Clay Co. has considerable excess manufacturing capacity. A special job order's cost sheet includes the following applied manufacturing overhead costs: Fixed costs: 21,000 Variable costs: 33,000 The fixed costs include a normal $3,700 allocation for in-house design costs, although no in-house design will be done. Instead, the job will require the use of external designers costing $7,750. What is the total amount to be included in the calculation to determine the minimum acceptable price for the job? Select one:

a. $58,050

b. $54,000

c. $40,750

d. $36,700

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  1. 11 January, 16:03
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    minimum acceptable price = $40,750

    so correct option is c. $40,750

    Explanation:

    given data

    Fixed costs = 21,000

    Variable costs = 33,000

    The fixed costs normal = $3,700

    external designers costing = $7,750

    to find out

    determine the minimum acceptable price

    solution

    we will get here minimum acceptable price will be express as

    minimum acceptable price = variable costs + external designers costing ... 1

    put here value we get

    minimum acceptable price = $33,000 + $7,750

    minimum acceptable price = $40,750

    so correct option is c. $40,750

    we also know here that it is special order that won't affect regular sales
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