Question
Adams Quilting Company makes blankets that it markets through a variety of department stores. It makes the blankets in batches of 2,500 units. Adams made
Adams Quilting Company makes blankets that it markets through a variety of department stores. It makes the blankets in batches of 2,500 units. Adams made 25,000 blankets during the prior accounting period. The cost of producing the blankets is summarized here.
Materials cost ($26 per unit 25,000) | $ | 650,000 | |
Labor cost ($20 per unit 25,000) | 500,000 | ||
Manufacturing supplies ($3 25,000) | 75,000 | ||
Batch-level costs (10 batches at $5,000 per batch) | 50,000 | ||
Product-level costs | 90,000 | ||
Facility-level costs | 300,000 | ||
Total costs | $ | 1,665,000 | |
Cost per unit = $1,665,000 25,000 = $66.6 | |||
A. Sunny Motels has offered to buy a batch of 500 blankets for $56 each. Adamss normal selling price is $92 per unit. Calculate the relevant cost per unit for the special order. Based on the preceding quantitative data, should Adams accept the special order? B. Sunny offered to buy a batch of 2,500 blankets for $56 per unit, calculate the relevant cost per unit for the special order. Should Adams accept the special order?
(For all requirements, round "Cost per unit" to 2 decimal places.) |
a. Cost per unit -------------------------
-Should Adams accept the special order-----------------------------
b. Cost per unit-------------------------------
-Should Adams accept the special order --------------------------------------
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