Anglen Co. manufactures and sells trophies for winners of athletic and other events. Its manufacturing plant has the capacity to produce 18,000 trophies each month; current monthly production is 14,400 trophies. The company normally charges $103 per trophy. Cost data for the current level of production are shown below:Variable costs:? Direct materials$460,800 Direct labor$316,800 Selling and administrative$ 15,840Fixed costs:? Manufacturing$404,640 Selling and administrative$ 74,880The company has just received a special one-time order for 900 trophies at $48 each. For this particular order, no variable selling and administrative costs would be incurred. This order would also have no effect on fixed costs. Assume that direct labor is a variable
cost.Required:Should the company accept this special order?
What will be an ideal response?
Only the direct materials and direct labor costs are relevant in this decision. To make the decision, we must compute the average direct materials and direct labor cost per unit.
| Direct materials | $ | 460,800 |
| Direct labor | 316,800 | |
| Total | $ | 777,600 |
| Current monthly production | 14,400 | |
| Average direct materials and direct labor cost per unit | $ | 54 |
You might also like to view...
Scenarios are multiple, plausible stories for probable futures.
Answer the following statement true (T) or false (F)
An Installment Accounts Receivable is classified as a non-current asset if the installment period is six months.
Answer the following statement true (T) or false (F)
Which of the following actions by the holder causes an impairment of the right of recourse?
A) releasing an obligor party from liability B) withholding collateral that would benefit that party C) writing "canceled" on the face of the instrument D) destruction of the instrument with the intent of eliminating the obligation
In website design, much of the work during the development phase is managed
A. through a content management system. B. by the marketing department. C. by the research and development team. D. through a web hosting service. E. by the firm's external information technologies (IT) department.