Kneller Co. manufactures and sells medals for winners of athletic and other events. Its manufacturing plant has the capacity to produce 12,000 medals each month; current monthly production is 9,600 medals. The company normally charges $99 per medal. Cost data for the current level of production are shown below:Variable costs:? Direct materials$480,800 Direct labor$153,600 Selling and administrative$ 24,960Fixed costs:? Manufacturing$144,000 Selling and administrative$ 78,720The company has just received a special one-time order for 500 medals at $89 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 | $ | 480,000 |
| Direct labor | 153,600 | |
| Total | $ | 633,600 |
| Current monthly production | 9,600 | |
| Average direct materials and direct labor cost per unit | $ | 66 |
You might also like to view...
In a short essay, compare and contrast the categories of mutually exclusive and collectively exhaustive
What will be an ideal response?
The staff interpretations statements issued by the SEC are called:
a. Staff Accounting Research Bulletins. b. Statements on Accounting Principles. c. Financial Accounting Standards. d. Staff Accounting Bulletins
When presenting a speech in which you are appealing to the audience using pathos, how would you communicate passion and emotion?
What will be an ideal response?
A ________ exists when an unauthorized party imports products and then sells them for a fraction of the price of authorized products
A) gray market B) dual distribution system C) disintermediation system D) black market E) dumping ground