Question
Rianne Company produces a light fixture with the following unit cost: Direct materials $2 Direct labor 1 Variable overhead 3 Fixed overhead 2 Unit cost
Rianne Company produces a light fixture with the following unit cost: Direct materials $2 Direct labor 1 Variable overhead 3 Fixed overhead 2 Unit cost $8 The production capacity is 300,000 units per year. Because of a depressed housing market, the company expects to produce only 180,000 fixtures for the coming year. The company also has fixed selling costs totaling $500,000 per year and variable selling costs of $1 per unit sold. The fixtures normally sell for $12 each. At the beginning of the year, a customer from a geographic region outside the area normally served by the company offered to buy 100,000 fixtures for $7 each. The customer also offered to pay all transportation costs. Since there would be no sales commissions involved, this order would not have any variable selling costs. Required: 1. Conceptual Connection: Based on a quantitative (numerical) analysis, should the company accept the order? , ------ the quantitative analysis is-----$ in favor of ------ the special order. Anybody can asiist me? tq
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