Anchor Compocy manufochzes a variety of took boxes. The firm is currently operating at Bog of its ful capacity of 4,800 machine. hours per month. Each unit requires 30 minutes of mochine time. its sales manager has been looking for special orders to niake. productive use of the evcess capacity. JCL Ltd, a potential custames has offered to buy 10,000 tool bowes at 5870 per box, provided that the entire quantity is delivered in two months. The current per bok cost dats ore as folsws Both foved and variable overhend are allocated using direct labour-hours as a base. Variable overhead is 51.80 per direct labour houe Without the ordec, Anchor would have enough business to operate at 3.840 direct labour-hours in each of the next two months. The regular seling price of the tool boxes is $11.70. A sales commission of 50 cents per unit is paid to sales representatives on all regular. sales. No additional selling or administrative expenses are anticipated on account of accepting this special order and no commissions will be paid on this special order. The production manager is concemed about the labour time thot 10,000 boxes would require. She cannot schedule overtime becaus Anchor has a policy against it. JCL. will not accept fewer than 10,000 fool boxes. Therefore, in order to fill the special order, If would bel. necessary for Anchor Company to divert some of its regular sales to the special order. Required: 1.a. Prepare conthbution margin income statements for the two-month petiod both with and without the special order. (theave no cells blank-be certain to enter " 0 " wherever required.) regular selling price of the tool bowes is $11.70. A sales commission of 50 cents per unit is paid to sales representatives on all regular sales: No additional selling or administrative expenses are anticipoted on account of occepting this special order and no commissions will be paid on this special order. The production manager is concerned about the fabour time that 10.000 boxes would require. She cannot schedule overtime because Anchor has a policy against it. JCL will not accept fewer than 10,000 tool boxes. Therefore, in order to fill the special order, it would be necessary for Anchor Company to divert some of its fegular sales to the special order. Required: 1-a. Prepare contribution margin income statements for the two-month perlod both with and without the special order, (teave no ceils blank - be certain to enter "0" wherever required.) 1-b. Based on financial considerations, should Anchor accept the order? Accept Not Accept 2. This part of the question is not part of your Connect assignment
