In addition to the product cost information for Lakeside Inc. in Mini-Exercise 16.1, Lakeside has received an
Question:
In addition to the product cost information for Lakeside Inc. in Mini-Exercise 16.1, Lakeside has received an offer from a nonprofit organization to buy 6,000 units at $56 per unit. Lakeside currently has unused production capacity.
Data from in Mini-Exercise 16.1
Lakeside Inc. produces a product that currently sells for $72 per unit. Current production costs per unit include direct materials, $20; direct labor, $24; variable overhead, $10; and fixed overhead, $10. Product engineering has determined that certain production changes could refine the product quality and functionality. These new production changes would increase material and labor costs by 20% per unit.
Required:
Should Lakeside accept this special sales order?
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Yes the offer should be accepted because the relevant cost of ...View the full answer
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