Company produces golf discs, which it normally sells to retailers for $12 each. The cost of manufacturing 20,400 golf discs is: 

Direct materials $11,016 

Direct labour 29,988

 Variable overhead 22,032

 Fixed overhead 45,000 

Total $108,036 

Sheffield also incurs 5% sales commission ($0.60) on each disc sold. Cato Corporation offers Sheffield $7.20 per disc for 5,100 discs. imprinting machine. No sales commission will result from the special order. Cato would sell the discs under its own brand name in foreign markets not yet served by. If accepts the offer, it will incur a one-time fixed cost of $12,500 due to the rental of an imprinting machine. No sales commission will result from the special order. Required: (a) Provide your quantitative analysis for the special order. (b) Should the company accept the special order based on your quantitative analysis? Explain. (c) What other factors (qualitative factors) should the company consider before accepting the special order?

Answer rating: 100% (QA)

Quantitative Analysis a Costs Direct Materials 20400 discs 11016 20400 discs 054 per disc Direct Labor 20400 discs 29988 20400 discs 147 per disc Vari... View the full answer