Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Megafour Company manufactures rings for men. Its manufacturing plant has the capacity to produce 12,000 rings each month. Current production and sales are 10,000 rings

image text in transcribed
Megafour Company manufactures rings for men. Its manufacturing plant has the capacity to produce 12,000 rings each month. Current production and sales are 10,000 rings per month. The company normally charges $300 per ring. Cost information for the current activity level is as follows: Variable costs that vary with number of units produced Direct materials $ 600,000 Direct manufacturing labor 450,000 Variable costs (for setups, materials handling, quality control, etc.) that vary with number of batches, 200 batches x $1,500 per batch 300,000 Fixed manufacturing costs 250,000 Fixed marketing costs 50,000 Total costs $1,650,000 Megafour has just received a one-time only special order for 2000 rings at $250 per ring. Accepting the special order would not affect the company's regular business. Megafour makes rings for its existing customer in batch sizes of 50 rings (200 batches x 50 rings per batch = 10,000 rings). The special order requires Megafour to make the rings in 40 batches of 50 each. Required: Should Megafour accept this special order? Show your calculations

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Frank Woods Business Accounting Volume 1

Authors: Alan Sangster Lewis Gordon Frank Wood

14th Edition

1292208627, 9781292208626

More Books

Students also viewed these Accounting questions

Question

What is your view of spirituality in the workplace?

Answered: 1 week ago