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Lamont Industries has an annual plant capacity of 66,000 units; current production is 50,000 units per year. At the current production volume, the variable cost
Lamont Industries has an annual plant capacity of 66,000 units; current production is 50,000 units per year. At the current production volume, the variable cost per unit is $35.00 and the fixed cost per unit is $4.80. The normal selling price of Lamont's product is $40.00 per unit. Lamont has been asked by Abbott Company to fill a special order for 11,000 units of the product at a special sales price of $26.00 per unit. Abbott is located in a foreign country where Lamont does not currently operate. Abbott will market the units in its country under its own brand name, so the special order is not expected to have any effect on Lamont's regular sales. Read the requirements. Requirement 1. How would accepting the special order impact Lamont's operating income? Should Lamont accept the special order? The special order will Lamont's operating income by $ Thus, Lamont accept the special sales order. Requirement 2. How would your analysis change if the special order sales price were to be $36.00 per unit and Lamont would have to pay an attorney a fee of $17,000 to make sure it is complying with export laws and regulations relating to the special order? Lamont's operating income by $ Thus, Lamont Under these new assumptions, the special order will accept the special sales order. i Requirements 1. How would accepting the special order impact Lamont's operating income? Should Lamont accept the special order? 2. How would your analysis change if the special order sales price were to be $36.00 per unit and Lamont would have to pay an attorney a fee of $17,000 to make sure it is complying with export laws and regulations relating to the special order? Print Done
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