Question 1

Seal Company has the capacity to produce 200,000 units of its product. They only plan on producing 150,000 units this year at a price of $15 per unit. They have fixed costs of $250,000 and typical unit costs as follows:

Direct Materials per Unit: $4.00

Direct Labor per Unit: $3.00

Variable Overhead per Unit: $2.00

Fixed Overhead per Unit: $2.00

Total Cost per Unit: $11.00

A customer approaches Seal Company with an offer to purchase 50,000 units at $8.00 per unit. Create an Accept or Reject Analysis for this offer.

***Please clearly label all parts of the work, show all steps and work and complete in an excel file******