goshford company produces s single product and has capacity toproduce 100.000 units per month. cost to produce its current salesof $80.000 units follo. the regular selling price of the product is$100 per unit. managment is approached by a new customer who wantsto purchase 20.000 units of the the productfor $75 per unit. if theorderis accepted, there will be no additional fixed manufacturingoverhead, and no additional fixed selling and administrativeexpenses. the customer is notin the company's regular sellingterritory, so there will be a $5 per unit shipping expense inaddition to the regularvariable selling and administrativeexpenses.
perunit costat 80.000 units
directmaterials $12.50 $1.000.000
directlabor 15.00 1.200.000
variable manufacturingoverhead 10.00 800.000
fixed manufacturingoverhead 17.50 1.400.000
variable selling and administrativeexpenses 14.00 1.120.000
fixed selling and administrativeexp 13.00 1.040.000
totals =$82.00 = $6.560.000
1.determine wether managment should accept or reject the newbusiness
2.what nonfinancial factors should managment consider whendeciding whether to take this order?
goshford company produces s single product and has capacity toproduce 100.000 units per month. cost to produce its current salesof $80.000 units follo. the regular selling price of the product is$100 per unit. managment is approached by a new customer who wantsto purchase 20.000 units of the the productfor $75 per unit. if theorderis accepted, there will be no additional fixed manufacturingoverhead, and no additional fixed selling and administrativeexpenses. the customer is notin the company's regular sellingterritory, so there will be a $5 per unit shipping expense inaddition to the regularvariable selling and administrativeexpenses.
perunit costat 80.000 units
directmaterials $12.50 $1.000.000
directlabor 15.00 1.200.000
variable manufacturingoverhead 10.00 800.000
fixed manufacturingoverhead 17.50 1.400.000
variable selling and administrativeexpenses 14.00 1.120.000
fixed selling and administrativeexp 13.00 1.040.000
totals =$82.00 = $6.560.000
1.determine wether managment should accept or reject the newbusiness
2.what nonfinancial factors should managment consider whendeciding whether to take this order?
