Question
Benson Quilting Company makes blankets that it markets through a variety of department stores. It makes the blankets in batches of 3,000 units. Benson made
Benson Quilting Company makes blankets that it markets through a variety of department stores. It makes the blankets in batches of 3,000 units. Benson made 27,000 blankets during the prior accounting period. The cost of producing the blankets is summarized here.
Materials cost ($28 per unit 27,000) | $ | 756,000 | |
Labor cost ($22 per unit 27,000) | 594,000 | ||
Manufacturing supplies ($4 27,000) | 108,000 | ||
Batch-level costs (9 batches at $6,000 per batch) | 54,000 | ||
Product-level costs | 220,000 | ||
Facility-level costs | 280,000 | ||
Total costs | $ | 2,012,000 | |
Cost per unit = $2,012,000 27,000 = $74.52 | |||
Required
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Sunny Motels has offered to buy a batch of 500 blankets for $59 each. Bensons normal selling price is $93 per unit. Calculate the relevant cost per unit for the special order. Based on the preceding quantitative data, should Benson accept the special order?
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Sunny offered to buy a batch of 3,000 blankets for $63 per unit, calculate the relevant cost per unit for the special order. Should Benson accept the special order?
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