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Alton Inc. is working at full production capacity producing 26,000 units of a unique product. Manufacturing costs per unit for the product are The unit
Alton Inc. is working at full production capacity producing 26,000 units of a unique product. Manufacturing costs per unit for the product are The unit manufacturing overhead cost is based on a $5 variable cost per unit and $156,000 fixed costs. The nonmanufacturing costs, all variable, are $8 per unit, and the sales price is $45 per unit. Sports Headquarters Company (SHC) has asked Alton to produce 6, 500 units of a modification of the new product. This modification would require the same manufacturing processes. SHC has offered to share the nonmanufacturing costs equally with Alton. Alton would sell the modified product to SHC for $35 per unit. Required Calculate the contribution margin for 6, 500 units for both the current and special order. Contribution margin Current Special order Should Alton produce the special order for SHC? Yes No Suppose that Alton Inc. had been working at less than full capacity to produce 21, 400 units of the product when SHC made the offer. What is the minimum price that Alton should accept for the modified product under these conditions? Factor in shared nonmanufacturing costs and opportunity costs. (Round your answer to 2 decimal places.)
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