Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Gold Medal Co. makes medals for winners of athletic and other competitions. Plant capacity is 90,000 medals each month. Current production and sales are 80,000
Gold Medal Co. makes medals for winners of athletic and other competitions. Plant capacity is 90,000 medals each month. Current production and sales are 80,000 medals per month. The normal price is $10 per medal. Costs, based on 80,000 medals per month: Variable cost that vary with the number of units produced: 240,000. Variable costs: 320 batches of 250 @ $65 per batch: 20,800. Fixed manufacturing costs: 60,000. Fixed marketing costs: 80,000. Total costs 79.200 Cost/unit, based on 80,000 units 3.00 .26 .75 1.00 Gold Medal has received a special one-time-only order for 8,000 medals at $4.00. These medals are simpler, so the medals will be made in batches of 500. The cost per batch is still $65. a. If we take this order, profit will increase / decrease - circle one) by $ b. Suppose our capacity is 85,000 medals, not 90,000 medals. The special order must be either be taken in full or be rejected completely. If we take the special order, we will not be able to sell 3,000 of our regular medals. Compared to the base case of 80,000 units, if we take the order, profit will increase / decrease - circle one) by $
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started