=+8-19 KK Special order, activity-based costing (CMA, adapted) OBJECTIVE 2 Award Plus manufactures medals for winners of athletic events and other contests. Its manufacturing plant has the capacity to produce 10000 medals each month. Current production and sales are 7500 medals per month. The company normally charges $150 per medal. Cost information for the current activity level is as follows:

Variable costs that vary with number of units produced Direct materials $262 500 Direct manufacturing labour 300 000 Variable costs (for set-ups, materials handling, quality control and so on)

that vary with number of batches, 150 batches × $500 per batch 75 000 Fixed manufacturing costs 275 000 Fixed marketing costs 175 000 Total costs $1 087 500 Award Plus has just received a special one-time-only order for 2500 medals at $100 per medal. Accepting the special order would not affect the company’s regular business. Award Plus makes medals for its existing customers in batch sizes of 50 medals (150 batches

× 50 medals per batch = 7500 medals). The special order requires Award Plus to make the medals in 25 batches of 100 each.

Required 1 Should Award Plus accept this special order? Show your calculations.