Cost Problem Taino Ventilators, Inc. makes a variety of ventilators. One of these products is a Ventilators model: SuperAir-XL. This model includes the ultimate in technology and is in strong demand. Expected demand for this year is 36,000 units, Full production capacity for SuperAir--XL is 41,000 units, but 36,000 units are considered normal capacity. The following unit price and breakdown is applicable in 2020: Per unit $25,000.00 Sales Price Less manufacturing costs: Materials Direct Labor Overhead: Variable Fixed Total manufacturing costs Gross Margin Less selling and administrative expenses: Selling: Variable Fixed Administrative, Fixed MS Office, variable* Total selling and administrative expenses Net Profit before taxes $12,086.00 $530.00 $225.00 $320.00 $13,161.00 $11,839.00 $363.00 $1,200.00 $815.00 $423.00 $2,801.00 $9,038.00 During May, the company received 2 special orders request from: Custco-Medical and Colmado-Apex. These orders are not part of the budgeted 36,000 units sales of SuperAir-XL for 2020, but there is sufficient capacity for possibly one order to be accepted. Orders received and their terms are: Order from Custco-Medical: 4,500 units at $23,500 per unit with Office deluxe $530 per unit. Order from Colmado-Apex: 3,500 units at $22,400 per unit with Office student $423 per unit. Since these orders were made directly to Taino Ventilators, Inc., no variable selling costs will be incurred. 1. Analyze the profitability of each of these two special orders. 2. Which special order should be accepted? 3. What other aspects need to be considered in addition to profitability? Cost Problem Taino Ventilators, Inc. makes a variety of ventilators. One of these products is a Ventilators model: SuperAir-XL. This model includes the ultimate in technology and is in strong demand. Expected demand for this year is 36,000 units, Full production capacity for SuperAir--XL is 41,000 units, but 36,000 units are considered normal capacity. The following unit price and breakdown is applicable in 2020: Per unit $25,000.00 Sales Price Less manufacturing costs: Materials Direct Labor Overhead: Variable Fixed Total manufacturing costs Gross Margin Less selling and administrative expenses: Selling: Variable Fixed Administrative, Fixed MS Office, variable* Total selling and administrative expenses Net Profit before taxes $12,086.00 $530.00 $225.00 $320.00 $13,161.00 $11,839.00 $363.00 $1,200.00 $815.00 $423.00 $2,801.00 $9,038.00 During May, the company received 2 special orders request from: Custco-Medical and Colmado-Apex. These orders are not part of the budgeted 36,000 units sales of SuperAir-XL for 2020, but there is sufficient capacity for possibly one order to be accepted. Orders received and their terms are: Order from Custco-Medical: 4,500 units at $23,500 per unit with Office deluxe $530 per unit. Order from Colmado-Apex: 3,500 units at $22,400 per unit with Office student $423 per unit. Since these orders were made directly to Taino Ventilators, Inc., no variable selling costs will be incurred. 1. Analyze the profitability of each of these two special orders. 2. Which special order should be accepted? 3. What other aspects need to be considered in addition to profitability
