Answered step by step
Verified Expert Solution
Question
1 Approved Answer
2. Now suppose that the don will reduce the pants that it can make and sell. for the shorts ? 11-40 Special order, short-run pricing.
2. Now suppose that the don will reduce the pants that it can make and sell. for the shorts ? 11-40 Special order, short-run pricing. Diamond Corporation produces baseball bats for kids that it sells for $37 each. At capacity, the company can produce 54,000 bats a year. The costs of producing and LO O @ selling 54,000 bats are as follows: Cost per Bat $14 4 2 Total Costs $ 756,000 216,000 108,000 270,000 108,000 162,000 $1,620,000 Direct materials Variable direct manufacturing labour Variable manufacturing overhead Fixed manufacturing overhead Variable selling expenses Fixed selling expenses Total costs 5 2 3 $30 Required 1. Suppose Diamond is currently producing and selling 44,000 bats. At this level of production and sales, its fixed costs are the same as given in the preceding table Home Run Corporation wants to places one-time special order for 10,000 bats at $21 each. Diamond will incur no variable selling costs for this special order. Should Diamond accept this one-time special order? Show your calculations. 2. Now suppose Diamond is currently producing and selling 54,000 bats. If Diamond accepts Home Run's offer , it will have to sell 10,000 fewer bats to its regular customers. (a) on financial considerations alone, should Diamond accept this one-time special order? Show your calculations. (b) On financial considerations alone, at what price would Diamond be indifferent between accepting the special order and continuing to sell to its regular customers at $37 per bat. (c) What other factors should Diamond consider in deciding whether to accept the one-time special order
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started