Pina Colada Company is a leading manufacturer of sunglasses. One of Pina Colada's products protects the...
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Pina Colada Company is a leading manufacturer of sunglasses. One of Pina Colada's products protects the eyes from ultraviolet rays. An upscale sporting goods store has contacted Pina Colada about purchasing 29,300 pairs of these sunglasses. Pina Colada's unit manufacturing cost, based on a full capacity of 248,000 units, is as follows: Direct materials $7 Direct labor 5 Manufacturing overhead (75% fixed) 25 Total manufacturing costs $37 Pina Colada also incurs selling and administrative expenses of $74,800 plus $3 per pair for sales commissions. The company has plenty of excess manufacturing capacity to use in manufacturing the sunglasses. Pina Colada's normal price for these sunglasses is $42 per pair. The sporting goods store has offered to pay $32 per pair. Since the special order was initiated by the sporting goods store, no sales commission will be paid. What would be the effect on Pina Colada's income if the special order were accepted? Pina Colada's income will by $ decrease increase Pina Colada Company is a leading manufacturer of sunglasses. One of Pina Colada's products protects the eyes from ultraviolet rays. An upscale sporting goods store has contacted Pina Colada about purchasing 29,300 pairs of these sunglasses. Pina Colada's unit manufacturing cost, based on a full capacity of 248,000 units, is as follows: Direct materials $7 Direct labor 5 Manufacturing overhead (75% fixed) 25 Total manufacturing costs $37 Pina Colada also incurs selling and administrative expenses of $74,800 plus $3 per pair for sales commissions. The company has plenty of excess manufacturing capacity to use in manufacturing the sunglasses. Pina Colada's normal price for these sunglasses is $42 per pair. The sporting goods store has offered to pay $32 per pair. Since the special order was initiated by the sporting goods store, no sales commission will be paid. What would be the effect on Pina Colada's income if the special order were accepted? Pina Colada's income will by $ decrease increase
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Answer Particulars Offer Price or Purchase Price Less Variable or R... View the full answer
Related Book For
Business Statistics
ISBN: 978-0321925831
3rd edition
Authors: Norean Sharpe, Richard Veaux, Paul Velleman
Posted Date:
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