Question
Miko Company manufactures a personal computer designed for use in schools and markets it under its own label. Mikohas the capacity to produce 33,000 units
Miko Company manufactures a personal computer designed for use in schools and markets it under its own label. Mikohas the capacity to produce 33,000 units a year but is currently producing and selling only 19,000 units a year. The computers normal selling price is $1,650 per unit with no volume discounts. The unit-level costs of the computers production are $490 for direct materials, $200 for direct labor, and $180 for indirect unit-level manufacturing costs. The total product- and facility-level costs incurred by Miko during the year are expected to be $2,180,000 and $801,000, respectively. Assume that Miko receives a special order to produce and sell 3,200 computers at $1,210 each. |
Required: |
a. | Calculate the contribution to profit from the special order. |
b. | Should Miko accept or reject the special order? | ||
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