Melbourne Cabinet sells 30,000 cabinets every year. Melbourne Cabinet is approached by Ms. Melissa Lord, a new
Question:
Melbourne Cabinet sells 30,000 cabinets every year. Melbourne Cabinet is approached by Ms. Melissa Lord, a new customer, to fulfill a large one-time-only special order for 5,000 cabinets at a price of $155 per cabinet. These cabinets are very similar to the ones offered to regular customers. The regular selling price for each cabinet is $228. Melbourne Cabinet is currently operating at 70% capacity. The following per unit data apply for sales to regular customers: • Direct materials: $50 • Direct labor: $65 • Variable manufacturing support: $30 • Fixed manufacturing support: $45 • Total manufacturing costs: $190 • Profit markup (20% of costs): $38 • Targeted selling price: $228 Ms. Lord wants the cabinets in cherry rather than oak, so direct material costs will increase by $8 per unit. Required: 1. Should Melbourne Cabinet accept this special one-time-only order for 5,000 cabinets? Your explanation must consider the probable impact of the special one-time-only order on net profit. Show all calculations. Ignore income tax. 2. For Melbourne Cabinet, what is the minimum acceptable price for this onetime-only special order?
Taxation Of Individuals And Business Entities 2023 Edition
ISBN: 9781265790295
14th Edition
Authors: Brian Spilker, Benjamin Ayers, John Barrick, Troy Lewis, John Robinson, Connie Weaver, Ronald Worsham