Assume that a Busch's soup plant is running at 80% of its monthly capacity. Busch's has just received a special order to produce 70,000 cases of chicken noodle soup for a national supermarket. The supermarket will sell the soup under its own private brand label. The soup will be the same in allrespects, except for thelabel, which will cost Busch's an extra $4,000 in total to design. The supermarket has offered to pay only $26.00 percase, which is well under Busch's normal sales price. Costs at the current production level (320,000 cases) are asfollows:

1.

Is there enough excess capacity to fill thisorder?

Cost per Case Total Cost (320,000 cases) Direct Materials S 3.840,000 $ 12.00 Direct Labor 1,600,000 5.00 Variable MOH 1,920,000 6.00 2,240,000 7.00 Fixed MOH S 9,600,000 $ 30.00 Total