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B company produces jerseys that sell for $200. Although production capacity is capped at 3000 jerseys per year, only 2500 are currently being produced and
B company produces jerseys that sell for $200. Although production capacity is capped at 3000 jerseys per year, only 2500 are currently being produced and sold. At this level of production the costs are:
Direct Materials: $68
Direct Labor: $30
Manufacturing OH: $28
Batch level set up costs - per batch of 500 units: $800
Annual product level costs: $15000
Allocated facility level costs: $50,000
X company offered to purchase 500 jerseys as a one time special purchase at a price of $135. Should B company accept this order? Why?
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