Question
Mystical Corporation manufactures a single product with the following unit costs for 5,000 units: Direct materials $ 60 Direct labor 30 Factory overhead (40% variable)
Mystical Corporation manufactures a single product with the following unit costs for 5,000 units:
Direct materials | $ 60 |
Direct labor | 30 |
Factory overhead (40% variable) | 90 |
Selling expenses (60% variable) | 30 |
Administrative expenses (20% variable) | 15 |
Total per unit | $225 |
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Recently, a company approached Mystical Corporation about buying 1,000 units for $225. Currently, the models are sold to dealers for $412.50. Mystical's capacity is sufficient to produce the extra 1,000 units. No additional selling expenses would be incurred on the special order.
Question: Suppose the special order is for 2,000 units in total, should mystical accept the special order?
Please reply asap.
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