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Genuine Leather Company sells 500,000 units of a tri-fold wallet at $14.50 each. The current unit cost per wallet is broken down as follows: Direct
Genuine Leather Company sells 500,000 units of a tri-fold wallet at $14.50 each. The current unit cost per wallet is broken down as follows: Direct Materials Direct Labor Variable Factory Overhead Fixed Factory Overhead 2.75 1.50 4.65 3.30 Scenario 1 At the beginning of 2010, Genuine Leather received a special order from a clothing store for 12,000 of these tri-fold wallets at a sale price of $12.50 per wallet. This is within Genuine's capacity to fill. Scenario 2 At the beginning of 2010, Genuine received a special order from the local Cub Scouts for 11,000 of these wallets at a sale price of $10 per wallet. This will add an additional $25,000 in fixed costs for Genuine. Prepare a contribution margin special order analysis to see whether they should fill the special order under each scenario. Explain why or why not
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