Case History: You work for a manufacturing company that produces specialty tools. One of your company’s customers has asked for price quotes on two of these tools: a portable flammable-gas sensing tool (SKU A1) and a self-contained radon measuring device (SKU B1). There are at least two other manufacturers that are competing for this customer’s orders for these products. The current market price ranges for the two products are: SKU A1 $315–$365 per unit SKU B1 $700–$800 per unit Your sales manager believes that quotes of $335 for SKU A1 and $725 for SKU B1 would get the customer’s orders and lead to significant additional orders in the future. Your company’s typical profit markup is 25% of total unit cost. Following are the costs and specifications for the two products: Write a paper (1,000 words minimum) In order to decide if you should offer quotes on these products, you will need to answer the following questions: (be sure to include your calculations justifying your answers) 1. What should be the target cost for each of the requested products? 2. What is the projected total unit cost of production and delivery for each of the products? 3. Based on the given information and the answers to questions 1 & 2, should the company produce the products? 4. Explain how the use of conventional costing methods may have changed the decision-making process in this case, and what the results may have meant to the company if activity-based costing had not been used. Use at least two scholarly sources to support your conclusions and be sure to cite your references
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