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11-19 (30 min.) Special order, activity-based costing. The Gold Plus Company manufactures medals for winners of athletic events and other contests. Its manufacturing plant has
11-19 (30 min.) Special order, activity-based costing. The Gold Plus Company manufactures medals for winners of athletic events and other contests. Its manufacturing plant has the capacity to produce 11,000 medals each month. Current production and sales are 10,000 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 $ 350,000 Direct manufacturing labor 375,000 Variable costs (for setups, materials handling, quality control, and so on) 100,000 that vary with number of batches, 200 batches x $500 per batch Fixed manufacturing costs 300,000 Fixed marketing costs 275,000 Total costs $1,400,000 Gold Plus has just received a special one-time-only order for 1,000 medals at $100 per medal. Accepting the special order would not affect the company's regular business. Gold Plus makes medals for its existing customers in batch sizes of 50 medals (200 batches x 50 medals per batch = 10,000 medals). The special order requires Gold Plus to make the medals in 25 batches of 40 medals. Should Gold Plus accept this special order? Show your calculations. DeCesare Computers makes 5,200 units of a circuit board, CB76. at a cost of $280 each. Variable eest per unit is $190 and fixed cost per unit is $90. Peach Electronics offers to supply 5,200 units of CB76 for $260. If DeCesare buys from Peach it will be able to save $10 per unit in fixed costs but continue to incur the remaining $80 per unit. Should DeCesare accept Peach's offer? Explain
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