The following data relate to Webster Manufacturing Anticipated sales Normal sales price/unit. Variable manufacturing cost/unit. Variable...
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The following data relate to Webster Manufacturing Anticipated sales Normal sales price/unit. Variable manufacturing cost/unit. Variable selling and administrative cost/unit.. Fixed manufacturing cost. Fixed selling and administrative cost. Total cost/unit (full absorption). Should Webster accept the special order? Webster has the opportunity to take a one-time special order from a customer who wants to buy 10,000 units, but is only willing to pay $7.00 per unit. The special order will not affect Webster's anticipated sales to other customers or the company's fixed costs. Sales. Variable cost of goods sold Manufacturing margin...... 50,000 units $10 $3 Webster Manufacturing Income Statement ******** $1 $75,000 ($1.50/unit) $100,000 ($2.00/unit) $7,50 Variable selling & administrative exp. Contribution margin.. Fixed costs: Fixed manufacturing costs............. Fixed selling & administrative exp.. Income from operations Without Special Order $ S S S S With Special Order $ $ S SA The following data relate to Webster Manufacturing Anticipated sales Normal sales price/unit. Variable manufacturing cost/unit. Variable selling and administrative cost/unit.. Fixed manufacturing cost. Fixed selling and administrative cost. Total cost/unit (full absorption). Should Webster accept the special order? Webster has the opportunity to take a one-time special order from a customer who wants to buy 10,000 units, but is only willing to pay $7.00 per unit. The special order will not affect Webster's anticipated sales to other customers or the company's fixed costs. Sales. Variable cost of goods sold Manufacturing margin...... 50,000 units $10 $3 Webster Manufacturing Income Statement ******** $1 $75,000 ($1.50/unit) $100,000 ($2.00/unit) $7,50 Variable selling & administrative exp. Contribution margin.. Fixed costs: Fixed manufacturing costs............. Fixed selling & administrative exp.. Income from operations Without Special Order $ S S S S With Special Order $ $ S SA
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To determine whether Webster Manufacturing should accept the special order we need to calculate the impact of the special order on the companys income ... View the full answer
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