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Question 2 (40 points) Winners's Circle manufactures medals for winners of athletic events and other contests. Current monthly production is 2,500 medals. Variable costs and
Question 2 (40 points) Winners's Circle manufactures medals for winners of athletic events and other contests. Current monthly production is 2,500 medals. Variable costs and fixed costs for the current activity level are as follows: 10,000 20,000 35,000 $65.000 Variable Costs: Direct Labor Direct Material Marketing Total Variable Costs Fixed Costs: Depreciation of Machinery Marketing Insurance Costs Total Fixed Costs Total Costs 20,000 20,000 30,000 $70,000 $135,000 The company just received a special offer from a supplier to buy 2,500 medals at $110,000 For this particular order, no variable marketing costs will be incurred. Depreciation of Machinery and Insurance costs cannot be avoided. Required: Required: a) Determine if the company should accept the special offer. Show your calculations and justify your answer. (32 points) b) Identify the costs that are irrelevant to this decision making. (8 points)
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