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Louisville Corporation produces baseball bats for kids that is sells for $32 each. At capacity, the company can produce 50,000 bats a year. The costs
Louisville Corporation produces baseball bats for kids that is sells for $32 each. At capacity, the company can produce 50,000 bats a year. The costs of producing and selling 50,000 bats are as follows: Direct materials Direct manufacturing labor Variable manufacturing overhead Fixed manufacturing overhead Variable selling expenses Fixed selling expenses Total costs Cost per Bat $12 3 1 5 2 4 $27 Total Costs $ 600,000 150,000 50,000 250,000 100,000 200,000 $1,350,000 Louisville has just received a one-time special order for 10,000 bats at $25 each. If Louisville accepts the special order, its fixed costs are the same as given in the preceding table. In addition, Louisville will incur no variable selling costs for this special order. 1. Suppose Louisville has the capacity to produce these extra 10,000 bats. Accepting the special order would not affect the company's regular business. Should Louisville accept this special order? Show our calculations. 2. Suppose Louisville has no capacity to produce these extra 10,000 bats. If Louisville accepts the special order, it will have to sell 10,000 fewer bats to its regular customers. Should Louisville accept this special order? Show our calculations
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