Question
Biello Company manufactures and sells medals for winners of athletic and other events. Its manufacturing plant has the capacity to produce 20,000 medals each month;
Biello Company manufactures and sells medals for winners of athletic and other events. Its manufacturing plant has the capacity to produce 20,000 medals each month; current monthly production is 19,000 medals. The company normally charges $60 per medal. Cost data for the current level of production are shown below.
Variable Costs Direct Materials $484,500 Direct
Labor $142,500
Selling and Administrative $135,038
Fixed Costs Manufacturing $185,275
Selling and Administrative $44,888
The company has just received a special one-time order for 700 medals at $40 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? Provide numerical support for your decision. (Points : 15)
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