Marsdon Company has an annual production capacity of 15,000 units. The costs associated with production and sale of the company's product are given below:Manufacturing costs:? Variable$12 per unit Fixed (annual cost)$90,000Selling and administrative costs:? Variable (sales commissions)$3 per unit Fixed (annual cost)$60,000The company presently is selling 12,000 units annually at a selling price of $28 each. A special order has been received from a distributor who wants to purchase 3,000 units at a special price of $20 each. Regular sales would not be affected by this order and the order could be filled without any impact on total fixed costs. Sales commissions on the special order would be reduced by one-third.Required:Determine whether the company should accept the special
order.
What will be an ideal response?
| Incremental revenues (3,000 units × $20) | $60,000 |
| Less incremental costs: | ? |
| Variable manufacturing (3,000 units × $12) | (36,000) |
| Variable selling (3,000 units × $2) | (6,000) |
| Net advantage of accepting the order | $18,000 |
Yes, the order should be accepted.
You might also like to view...
John, a senior editor at TSS News, asks Ronda, the editor-in-chief, for a sabbatical. Which statement best explains why TSS News would pay John during the sabbatical, if Ronda approves it?
A. During the sabbatical, John can develop new skills and refresh his existing ones. B. While John is away, Ronda can promote another senior editor on the team. C. John will use the time to try his hand at acquiring skills in various other departments. D. During the sabbatical, John will have more time to spend with family members. E. John's salary cannot be matched by any other company in the local area.
Identify the key finding in Branti v. Finkel (1980)?
What will be an ideal response?
At an arbitration hearing, the process, like a court trial, must be open to the public
a. True b. False Indicate whether the statement is true or false
What is the difference between the nondirectional research hypothesis and the directional research hypothesis?
What will be an ideal response?