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Green Grow Incorporated ( GGl ) manufactures lawn fertilizer. Because of the product's very high quality. GGI often receives special orders from agricultural research groups.
Green Grow Incorporated GGl manufactures lawn fertilizer. Because of the product's very high quality. GGI often receives
special orders from agricultural research groups. For each type of fertilizer sold, each bag is carefully filled to have the
precise mix of components advertised for that type of fertilizer. GGI's operating capacity is onehundredpound
bags per month, and it currently is selling bags manufactured in batches of bags each. The firm just
received a request for a special order of onehundredpound bags of fertilizer for $ from APAC, a research
organization. The production costs would be the same, but there would be no variable selling costs. Delivery and other
packaging and distribution services would cause a onetime $ cost for GGI. The special order would be processed in
two batches of bags each. No incremental batchlevel costs are anticipated. Most of the batchlevel costs in this
case are shortterm fixed costs, such as salaries and depreciation. The following information is provided about GGI's
current operations:
No marketing costs would be associated with the special order. Because the order would be used in research and
consistency is critical, APAC requires that GGI fill the entire order of bags.
Assume that the $ fixed manufacturing overhead cost per unit consists of facilitylevel costs $ unit at the
unit output level with the remainder being setuprelated ie batchlevel costs. Assume that the setuprelated
costs increase in total with the number of batches produced and that the facilitylevel fixed costs do not vary in total, with
either the number of units produced or the number of batches produced during a period.
Complete this question by entering your answers in the tabs below.
special order is accepted at the breakeven price determined in requirement
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