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Mason Co. manufactures and sells trophies for winners of athletic and other events. Its manufacturing plant has the capacity to produce 18,000 trophies each month;
Mason Co. manufactures and sells trophies for winners of athletic and other events. Its manufacturing plant has the capacity to produce 18,000 trophies each month; current monthly production is 14,954 trophies. The company normally charges $112 per trophy. Cost data for the current level of production are shown below: Variable costs: Direct materials Direct labor Selling and administrative Fixed costs: Manufacturing Selling and administrative $460,800 $316,800 $15,840 $404,640 $74,880 The company has just received a special one-time order for 900 trophies at $48 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: What is the opportunity cost of accepting this special order? Should the company accept this special order? Why
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