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(CMA, adapted) The Reward One Company manufactures windows. Its manufacturing plant has the capacity to produce 12,000 windows each month. Current production and sales are
- (CMA, adapted) The Reward One Company manufactures windows. Its manufacturing plant has the capacity to produce 12,000 windows each month. Current production and sales are 10,000 windows per month. The company normally charges $250 per window. Cost information for the current activity level is as follows: The table depicts variable and fixed costs for The Reward One Company. The details of the table are as follows:1. Variable costs that vary with number of units produced, direct materials: 600,000 dollars2. Variable costs that vary with number of units produced, direct manufacturing labor: 700,000 dollars3. Variable costs (for setups, materials handling, quality control, and so on) that vary with number of batches, 100 batches times 1,500 dollars per batch: 150,000 dollars4. Fixed manufacturing costs: 250,000 dollars5. Fixed marketing costs: 400,000 dollars6. Total costs: 2,100,000 dollars Reward One has just received a special one-time-only order for 2,000 windows at $225 per window. Accepting the special order would not affect the company’s regular business or its fixed costs. Reward One makes windows for its existing customers in batch sizes of 100 windows . The special order requires Reward One to make the windows in 25 batches of 80 windows. Required 1. Should Reward One accept this special order? Show your calculations. What is the contribution margin per unit for the special order?
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