Manning
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 15,300 trophies. The company normally charges
$141 per trophy. Cost data for the current level of production are shown below.
Variable
Costs
Direct
Materials $948,600
Direct
Labor $290,700
Selling
and Administrative $41,300
Fixed
Costs
Manufacturing $579,870
Selling
and Administrative $134,640
The company has just received a special one-time order for 900 trophies at $73 each. For this particular order, no variable selling and administrative costs would be incurred. This order would also have no effect on fixed costs.
Required:
Should the company accept this special order? Why? (Points : 15)
TUTORIAL PREVIEW
Manning Co
| |
Production Capacity
|
18,000
|
Current Monthly Production
|
15,300
|
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