Special order. Brian's Sport Shop makes jerseys for athletic teams. The Red Soxx baseball club has ottered
Question:
Special order. Brian's Sport Shop makes jerseys for athletic teams. The Red Soxx baseball club has ottered to buy 80 jerseys for the teams in its league for $18 per jersey.
The normal team price for such jerseys is $20. Brian's purchases the plain jerseys for $12 per jersey, then sews a name and number to each jersey at a variable cost of $3 per jersey. Brian's makes about 2.000 jerseys per year and has a capacity limit of 4,000 jerseys. The annual fixed cost of equipment used in the sewing process is
$5,000 and other fixed costs allocated to jerseys are $2,000, bringing the total costs allocated to each jersey to $3.50.
Compute the amount by which the operating profit of Brian's would change if the special order were accepted. Should Brian's accept the special order?
Step by Step Answer:
Managerial Accounting An Introduction To Concepts Methods And Uses
ISBN: 9780030259630
7th Edition
Authors: Michael W. Maher, Clyde P. Stickney, Roman L. Weil, Sidney Davidson