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Forrest Corporation manufactures parts that are used in the production of washers and dryers. The following...

  1. Forrest Corporation manufactures parts that are used in the production of washers and dryers. The following costs are associated with part no. 65:

Direct materials

$50

Direct labor

19

Variable manufacturing overhead

22

Fixed manufacturing overhead

15

Variable selling costs

11

The company received a special-order inquiry from an appliance manufacturer in Brazil for 15,000 units of part no. 65. Only $3 of fixed manufacturing will be incurred on the order, and the variable selling costs per unit will amount to only $5. Since Forrest has excess capacity, the minimum price that Forrest should charge the Brazil manufacturer is?

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Answer #1

Calculate minimum price

Direct material 50
Direct labor 19
Variable manufacturing overhead 22
Fixed manufacturing overhead 3
Variable selling cost 5
Minimum selling price 99
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