Silver Lake Cabinets is approached by Ms. Jenny Zhang, a new customer, to fulfill a large ...

Silver Lake Cabinets is approached by Ms. Jenny Zhang, a new customer, to fulfill a large one-time-only special order for a product similar to one offered to regular customers. The following per unit data apply for sales to regular customers:

   Direct materials   $100
   Direct labour   125
   Variable manufacturing support   60
   Fixed manufacturing support   75
      Total manufacturing costs   $360
   Markup (60%)   216
   Targeted selling price   $576

Silver Lake Cabinets has excess capacity. Ms. Zhang wants the cabinets in cherry rather than oak, so direct material costs will increase by $30 per unit.

Required:
a.   For Silver Lake Cabinets, what is the minimum acceptable price of this one-time-only special order?
b.   Other than price, what other items should Silver Lake Cabinets consider before accepting this one-time-only special order?
c.   How would the analysis differ if there was limited capacity?