Cliffy Industries produces and sells 22,000 units of a single product. Costs associated with this level of
Fantastic news! We've Found the answer you've been seeking!
Question:
Cliffy Industries produces and sells 22,000 units of a single product. Costs associated with this level of production are as follows:
Direct materials $15 per unit
Direct manufacturing labor 45 per unit
Variable manufacturing overhead 25 per unit
Fixed manufacturing overhead $40,000
The product normally sells for $160 per unit. Cliffy Industries has received a special order to sell 2,500 units at $130 per unit. Cliffy Industries has excess production capacity.
Required:
- Should the special order be accepted? Explain why or why not.
- How much will theoperating income of Cliffy Industries change if the special order is accepted? Show your calculations.
- What are the other factors Cliffy Industries should consider? Discuss.
Posted Date: