Question

Pronghorn Corporation has the excess manufacturing capacity to fill a special order from Nash, Inc. Using Pronghorn’s normal costing process, variable costs of the special order would be $15,200 and fixed costs would be $25,290. Of the fixed costs, $5,800 would be for unavoidable overhead costs, and the remainder for rent on a special machine needed to complete the order.

What is the minimum price Pronghorn should quote to Nash?

Enter the minimum price in dollars

Answer 1

Pronghorn Corporation
CALCULATION OF MINIMUM QUOTE PRICE TO NASH
	AMOUNT	REMARKS
Variable Cost of Special Order	15200	Future Cost - Cash Outflow
Fixed Cost :
Avoidable($25,290 - $ 5,800)	$                             -	$ 19,490 - This is sunk cost so not taken
Unavoidable Overhead Cost from Fixed	$                5,800.00	Unavoidable so taken in Decission making
Total Cost	$              21,000.00
Answer =Minimum price to be quot to Nash is $ 21,000 for special order