A company is currently operating at 70% capacity producing 8,000 units. Cost information relating to this current production is shown in the following table:?Per UnitSales price$15.00Direct material$3.20Direct labor$7.10Variable overhead$0.05Fixed overhead$0.60The company has been approached by a customer with a request for a special order for 1,500 units. The sales price per unit for this special order is $10. Should the company accept the special order?
What will be an ideal response?
8,000/.7 - 8,000 = 3,428 unit remaining capacity
The company should not accept this special order. Incremental costs exceed incremental income.
$3.20 + $7.10 + $0.05 = $10.35 incremental costs
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