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Anglen Company manufactures and sells trophies for winners of athletic and other events. Its manufacturing plant has the capacity to produce 18,900 trophies each month;
Anglen Company manufactures and sells trophies for winners of athletic and other events. Its manufacturing plant has the capacity to produce 18,900 trophies each month; current monthly production is 15,480 trophies. The company normally charges $107.50 per trophy. Cost data for the current level of production are shown below: Variable costs: Direct materials $ 465,300 Direct labor $ 348,300 Selling and administrative $ 19,440 Fixed costs: Manufacturing $ 409,590 Selling and administrative $ 76,680 The company has just received a special one-time order for 945 trophies at $49.80 each. For this particular order, no variable selling and administrative costs would be incurred. This order would also have no effect on fixed costs. Assume that direct labor is a variable cost. Required: Should the company accept this special order? Why
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