From the course: Accounting Foundations: Cost-Based Pricing Strategies
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Pricing a special order at the print shop
From the course: Accounting Foundations: Cost-Based Pricing Strategies
Pricing a special order at the print shop
- Costs are important to consider when faced with whether to accept a special order from a customer. - We will illustrate using an example from a hypothetical business, Maddie Print Shop. - Now, the owner of Maddie Print Shop is considering whether she should take a job to print ten thousand copies of an announcement and this job must be done tonight. - The costs associated with this special order have been identified as follows. - There's paper cost, ten thousand sheets at a penny a piece. Labor cost, the job will take five hours. Now, the regular labor cost is sixteen dollars per hour but this job must be done on a rush basis after regular business hours, so the labor rate will be twenty-four dollars per hour. - And Maddie uses a high grade copy machine that is rented. The rental charge is four thousand dollars per month plus two cents per copy. In an average month, Maddie makes about two hundred thousand copies. -…
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