Bob Billy is the CEO and President of a chain of Coffee stores that stretches...
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Accounting
Bob Billy is the CEO and President of a chain of Coffee stores that stretches from the upper Midwestern United States throughout eastern Canada. The following per unit data applies to Bob's operations for capacity of 2,000,000 units per month:
Per Unit
Selling Price
$ 5.00
Direct Materials
$ 1.00
Direct Labor
$ 0.50
Variable Overhead
$ 0.50
Variable Selling Expense
$ 0.25
Fixed Overhead
$ 1.50
Fixed Selling Expense
$ 1.00
If instead of a special order, the price was being competitively bid, and Bob knew through industry contacts that their competitors variable manufacturing costs were 10% higher than their own. Assuming that Bobss competitor must also agree to the presentation, and the order will still not incur any variable selling costs, what price should Shim bid for this contract?
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