Dalton Quilting Company makes blankets that it markets through a variety of department stores. It makes the
Question:
Materials cost ($10 per unit × 20,000)...........................$200,000
Labor cost ($9 per unit × 20,000) .................................180,000
Manufacturing supplies ($1.50 × 20,000) .........................30,000
Batch-level costs (20 batches at $2,000 per batch)...............40,000
Product-level costs....................................................80,000
Facility-level costs...................................................145,000
Total costs...........................................................$675,000
Cost per unit = $675,000 ÷ 20,000 = $33.75
Required
a. Sunny Motels has offered to buy a batch of 500 blankets for $23.50 each. Dalton's normal selling price is $45 per unit. Based on the preceding quantitative data, should Dalton accept the special order? Support your answer with appropriate computations.
b. Would your answer to Requirement a change if Sunny offered to buy a batch of 1,000 blankets for $28 per unit? Support your answer with appropriate computations.
c. Describe the qualitative factors that Dalton Quilting Company should consider before accepting a special order to sell blankets to Sunny Motels.
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Related Book For
Fundamental Managerial Accounting Concepts
ISBN: 978-1259569197
8th edition
Authors: Thomas Edmonds, Christopher Edmonds, Bor Yi Tsay, Philip Olds
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