Awash Co manufactures and sells trophies for winners of athletic and other events. Its manufacturing plant has
Question:
Awash Co manufactures and sells trophies for winners of athletic and other events. Its manufacturing plant has the capacity to produce 16,000 trophies each month; current monthly production is 12,800 trophies. The company normally charges $110 per trophy. Cost data for the current level of production are shown below:
Variable costs: | |
Direct materials | $614,400 |
Direct labor | $256,000 |
Selling and administrative | $35,840 |
Fixed costs: | |
Manufacturing | $294,400 |
Selling and administrative | $94,720 |
The company has just received a special one-time order for 1,200 trophies at $58 each. For this particular order, no variable selling and administrative costs would be incurred. This order would also have no effect on fixed costs.
Required:
Should the company accept this special order? Why?
Statistical Reasoning for Everyday Life
ISBN: 978-0321817624
4th edition
Authors: Jeff Bennett, Bill Briggs, Mario F. Triola