Question
Mother's Bottlers, Inc., is a small bottling company that bottles and sells cold teas for $3.50 per unit. The cost of each unit follows: Materials
Mother's Bottlers, Inc., is a small bottling company that bottles and sells cold teas for $3.50 per unit. The cost of each unit follows: Materials $ 1.20 Labor 0.60 Variable overhead 0.20 Fixed overhead ($21,900 per month, 21,900 units per month) 1.00 Total costs per unit $ 3.00 One of Mother's regular customers asked the company to fill a special order of 800 units at a selling price of $2.50 per unit. Mother's can fill the order using existing capacity without affecting total fixed costs for the month. However, Mother's manager was concerned about selling at a price below the $3.00 cost per unit and has asked for your advice. Required: a. Prepare a schedule to show the impact of providing the special order of 800 units on Mother's profits in addition to the regular production and sales of 21,900 units per month.
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