Question
Anglen Co. manufactures and sells trophies for winners of athletic and other events. Its manufacturing plant has the capacity to produce 18,000 trophies each month;
Anglen Co. manufactures and sells trophies for winners of athletic and other events. Its manufacturing plant has the capacity to produce 18,000 trophies each month; current monthly production is 14,400 trophies. The company normally charges $103 per trophy. Cost data for the current level of production are shown below:
Variable costs: |
|
Direct materials............................. | $460,800 |
Direct labor.................................. | $316,800 |
Selling and administrative.............. | $15,840 |
Fixed costs: |
|
Manufacturing............................... | $404,640 |
Selling and administrative.............. | $74,880 |
The company has just received a special one-time order for 900 trophies at $48 each. For this particular order, no variable selling and administrative costs would be incurred. This order would also have no effect on fixed costs. Required: Should the company accept this special order? Why?
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