Marchant Industries, which produces heating blankets, has been trying to get a customer, Home Select, Inc.,...
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Marchant Industries, which produces heating blankets, has been trying to get a customer, Home Select, Inc., to purchase a special order of heating blankets in order to keep the plant busy at a time when production is expected to be slower than normal. Home Select has agreed, but only if the price is reduced to $42. Listed below are some data prepared by Marchant. The special order can be produced within available capacity, and will be made in a single batch. Next Month's Operating Information Sales Sales Price Per Unit Per unit costs Variable Manufacturing Costs Batch level manufacturing costs Variable Marketing Costs Fixed Manufacturing Costs Fixed Marketing Costs Special Order Information Sales Sales Price Per Unit 10,000 units (made in 10 batches of 1,000 each) $65 28 12 8 6 3 5.000 units $42 There are no variable marketing costs associated with the special order, but Ruby Marchant, the president of the firm, has spent $1,500 during the past month trying to get Home Select to purchase this special order. Required: Determine the effect of the special order, if taken, on Marchant's total profit. Marchant Industries, which produces heating blankets, has been trying to get a customer, Home Select, Inc., to purchase a special order of heating blankets in order to keep the plant busy at a time when production is expected to be slower than normal. Home Select has agreed, but only if the price is reduced to $42. Listed below are some data prepared by Marchant. The special order can be produced within available capacity, and will be made in a single batch. Next Month's Operating Information Sales Sales Price Per Unit Per unit costs Variable Manufacturing Costs Batch level manufacturing costs Variable Marketing Costs Fixed Manufacturing Costs Fixed Marketing Costs Special Order Information Sales Sales Price Per Unit 10,000 units (made in 10 batches of 1,000 each) $65 28 12 8 6 3 5.000 units $42 There are no variable marketing costs associated with the special order, but Ruby Marchant, the president of the firm, has spent $1,500 during the past month trying to get Home Select to purchase this special order. Required: Determine the effect of the special order, if taken, on Marchant's total profit.
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Dollar effect of special order Explanation 1Fixed cost are not relevant a... View the full answer
Related Book For
Managerial Accounting An Integrative Approach
ISBN: 9780999500491
2nd Edition
Authors: C J Mcnair Connoly, Kenneth Merchant
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