Question
3. Jerston Company has an annual plant capacity of 3,000 units. Data concerning this product are given below: Annual sales at regular selling prices......
3. Jerston Company has an annual plant capacity of 3,000 units. Data concerning this product are given below: Annual sales at regular selling prices...... Manufacturing costs: Variable...... Fixed (annual).. Selling and administrative expenses: Variable (sales commissions)... Fixed (annual)....... 2,500 units $20 per unit $75,000 $6 per unit $15,000 The company has received a special order for 500 units at a selling price of $45 each. Regular sales would not be affected, and sales commissions on the 500 units would be reduced by one-third. This special order would have no impact on total fixed costs. Determine whether the company should accept the special order. Show all computations.
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