Question
Metlock Inc. manufactures two electronic products, widgets and gadgets, and has a capacity of 1,400 machine hours. Prices and costs for each product are as
Metlock Inc. manufactures two electronic products, widgets and gadgets, and has a capacity of 1,400 machine hours. Prices and costs for each product are as follows:
Widget | Gadget | |||
---|---|---|---|---|
Selling price per unit | $ 254 | $ 334 | ||
Variable costs per unit | ||||
Direct materials | 34 | 39 | ||
Other direct costs | 14 | 16 | ||
Variable Manufacturing overhead costs* | 34 | 48 |
* Variable manufacturing overhead costs are applied at a rate of $ 44 per machine hour. Marx Industries, a potential client, has offered $ 254 per unit to Metlock for 254 special units. These 254 units would incur the following production costs and time:
Direct materials | $ 8,368 | |
Other direct costs | $ 3,400 | |
Machine hours | 229 |
(a)
Assume that Metlock has enough excess capacity to produce the special order. Calculate what the total contribution would be if the special order from Marx were accepted.
Total contribution margin | $ enter the total contribution margin in dollars |
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