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Problem #1 - Special Order Broward Inc. produces jerseys for several high-school football teams. They have capacity to make up to 10,000 jerseys and they
Problem #1 - Special Order Broward Inc. produces jerseys for several high-school football teams. They have capacity to make up to 10,000 jerseys and they are currently producing 7,000. Below is the cost information: Direct materials 12.00 Direct labor 8.00 Variable Manufacturing overhead 2.50 Fixed Manufacturing overhead 3.00 Unit product cost $ 25.50 The jerseys normally sell for $59 each. Required: 1. A local high-school has approached them and would like to purchase 100 jerseys for $24 each. This would be a one-time sale and would not affect the normal operations. Should they accept the special order? Why or why not? 2. A local high-school has approached them and would like to purchase 100 jerseys for $38 each. This would be a one-time sale and would not affect the normal operations. However, this order would require special ink that would cost an additional $10 per jersey. They would also have to purchase an ironing machine that cost $450. The machine has no alternative use after this order is processed. Should they accept the special order? Why or why not
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