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Kneller Company manufactures and sells medals for winners of athletic and other events. Its manufacturing plant has the capacity to produce 15,000 medals each month;
Kneller Company manufactures and sells medals for winners of athletic and other events. Its manufacturing plant has the capacity to produce 15,000 medals each month; current monthly production is 10,000 medals. The company normally charges $101 per medal Cost data for the current level of production are shown below: Variable costs: Direct materials $ 489,600 Direct labor $ 156,700 Selling and administrative $ 25,400 Fixed costs: Manufacturing $ 146,600 Selling and administrative $ 80,200 The company has just received a special one-time order for 400 medals at $89 each. For this particular order, no variable selling and administrative costs would be incurred. This order would also have no effect on fixed costs. Assume that direct labor is a variable cost. Required: Should the company accept this special order? Accepted Not accepted
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