Palmer Company manufactures and sells trophies for winners ofathletic and other events. Its manufacturing plant has the capacityto produce 22,000 trophies each month; current monthly productionis 20,900 trophies. The company normally charges $62 per trophy.Cost data for the current level of production are shownbelow.
Variable Costs
Direct Materials
$541,880
Direct Labor
$193,800
Selling and Administrative
$41,100
Fixed Costs
Manufacturing
$250,000
Selling and Administrative
$133,000
The company has just received a special one-time order for 800trophies at $31 each. For this particular order, no variableselling and administrative costs would be incurred. This orderwould also have no effect on fixed costs.
Required:
Should the company accept this special order? Provide numericalsupport for your decision.
Palmer Company manufactures and sells trophies for winners ofathletic and other events. Its manufacturing plant has the capacityto produce 22,000 trophies each month; current monthly productionis 20,900 trophies. The company normally charges $62 per trophy.Cost data for the current level of production are shownbelow.
Variable Costs |
| Direct Materials | $541,880 | |
Direct Labor | $193,800 | ||
Selling and Administrative | $41,100 |
Fixed Costs | ||
| Manufacturing | $250,000 |
Selling and Administrative | $133,000 |
The company has just received a special one-time order for 800trophies at $31 each. For this particular order, no variableselling and administrative costs would be incurred. This orderwould also have no effect on fixed costs.
Required:
Should the company accept this special order? Provide numericalsupport for your decision.
Related questions
Biello Company manufactures and sells medals for winners ofathletic and other events. Its manufacturing plant has the capacityto produce 20,000 medals each month; current monthly production is19,000 medals. The company normally charges $60 per medal. Costdata for the current level of production are shown below.
Variable Costs | |||
| $484,500 | ||
| $142,500 | ||
| $135,038 | ||
Fixed Costs | |||
| $185,275 | ||
| $44,888 | ||
The company has just received a special one-time order for 700medals at $40 each. For this particular order, no variable sellingand administrative costs would be incurred. This order would alsohave no effect on fixed costs.
Required:
Should the company accept this special order? Provide numericalsupport for your decision.
