DEF Company produces kitchen cabinets for home builders across western Canada. The cost of producing 5,000 cabinets
Question:
DEF Company produces kitchen cabinets for home builders across western Canada. The cost of producing 5,000 cabinets is as follows.
Materials $ 400,000 Labour 150,000 Variable overhead 100,000 Fixed overhead300,000 Total $950,000
DEF also incurs selling expenses of $15 per cabinet.GHI company has offered DEF $155 per cabinet for a special order of 1,000 cabinets. The cabinets would be sold to homebuilders in eastern Canada and thuswould not conflict
with DEF's current sales. Selling expenses per cabinet would be only $5 per cabinet. DEF has available capacity to do the work.
a. how can I incremental analysis for the special order.
b. Should DEF accept the special order? Why or why not?
Financial And Managerial Accounting
ISBN: 9781118004234
1st Edition
Authors: Donald E. Kieso, Paul D. Kimmel, Jerry J. Weygandt