Jeff's Widget Corporation produces and sells a part used in the production of bicycles. The unit costs
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Question:
Jeff's Widget Corporation produces and sells a part used in the production of bicycles. The unit costs associated with this part are as follows:
Direct Materials $0.14
Direct labor 0.30
Variable manufacturing overhead 0.20
Fixed manufacturing costs 0.05
Total cost $0.69
The Saturn Company has approached Jeff's Widget Corporation with an offer to purchase 20,000 units of this part at a price of $0.80. Acceptance of this special sales order will put idle manufacturing capacity to use and will not affect regular sales. Total fixed costs will not change.
Determine whether or not to accept the special request. Justify your conclusion.
Related Book For
Cost Management Accounting and Control
ISBN: 978-0324559675
6th Edition
Authors: Don R. Hansen, Maryanne M. Mowen, Liming Guan
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