Question
Centric Sail Makers manufactures sails for sailboats. The company has the capacity to produce 36,000 sails per year and is currently producing and selling 30,000
Centric Sail Makers manufactures sails for sailboats. The company has the capacity to produce 36,000 sails per year and is currently producing and selling 30,000 sails per year. The following information relates to current production:
Sales price per unit $180
Variable costs per unit:
COGS $60
Selling and administrative $20
Total fixed costs:
COGS $675,000
Selling and administrative $300,000
The company has been approached with a special order for 5,500 sails at a sales price of $90 per unit. Variable selling and administrative costs would not be incurred on this order, however, fixed costs would increase by $6,000 to purchase a special piece of equipment needed to produce these sails. What is the financial advantage (disadvantage) of accepting the special order?
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