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Cool Air Inc. manufactures single-room-sized air conditioners. The cost accounting system estimates manufacturing costs to be $240.00 per air conditioner, consisting of 60% variable costs and 40% fixed costs. The company has surplus capacity available. It is Cool Air Inc.'s policy to add a 20% markup to full costs.

A medium-sized motel chain is expanding and has decided to air condition all of its rooms, which are currently not air-conditioned. Cool Air Inc. is invited to submit a bid to the motel chain.

What per-unit price will Cool Air Inc. most likely bid for this special order of 200 units? Assume that the price is being fixed for a long-term commitment.

Answer :

Answer:

Selling price= $172.8

Explanation:

Giving the following information:

Manufacturing costs to be $ 240.00 per air​ conditioner

Consisting of 60​% variable costs and 40​% fixed costs.

Selling price= 20​% markup to full costs.

Because it is a special offer and there is unused capacity, we will not take into account the fixed costs:

Unitary cost= 240*0.6= $144

Selling price= 144*1.2= $172.8

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