Question: Please Help Solve. 3. Special Offers/Orders (4pts): Gott's Guitar's Ltd. makes and sells acoustic guitars. Each guitar regularly sells for $150. The rm typically produces
Please Help Solve.

3. Special Offers/Orders (4pts): Gott's Guitar's Ltd. makes and sells acoustic guitars. Each guitar regularly sells for $150. The rm typically produces and sells 400 guitars each month, which is 80% of capacity (i.e. capacity is 500 guitars). At a production level of 400 guitars, the costs per guitar are as follows: For guitar Direct materials S 54 Direct labor S 29 Variable OH S 13 Fixed 0H 5 17 Variable Selling 8: Admin S 5 Fixed Selling & Admin S 12 A special order has been received by Gott's Guitar's from a customer for production and sale of 25 guitars to this customer for $110 each. The Selling 8: Admin costs that would be incurred on this order would be the same SS per guitar as noted above for packaging and shipping. Assume that the rm's Fixed 0H and Fixed Selling 8: Admin costs would not be affected by this special order. Calculate the financial advantage (disadvantage) for the company if it were to accept this special order
Step by Step Solution
There are 3 Steps involved in it
Get step-by-step solutions from verified subject matter experts
