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------------------------------------------------ Cool Air Inc. manufactures single room-sized air conditioners. The cost accounting system estimates manufacturing costs to be $230 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 30% markup to full costs.

Cool Air Inc. is invited to bid on a one-time-only special order to supply 110 air conditioners. What is the lowest price Cool Air Inc. should bid on this special order?

To determine the lowest price Cool Air Inc. should bid on the special order, we need to calculate the full cost per air conditioner and add a 30% markup.

The full cost per air conditioner is calculated as follows:

Variable cost per unit = 60% x $230 = $138

Fixed cost per unit = 40% x $230 = $92

Full cost per unit = Variable cost per unit + Fixed cost per unit = $138 + $92 = $230

Adding a 30% markup to the full cost per unit gives:

Selling price per unit = Full cost per unit + 30% x Full cost per unit = $230 + 0.3 x $230 = $299

Therefore, the lowest price Cool Air Inc. should bid on the special order is $299 per unit.

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