Question
Rippey Corporation manufactures a single product with the following unit costs for 5,000 units: Direct materials $60 Direct labor 30 Factory overhead (30% variable) 90
Rippey Corporation manufactures a single product with the following unit costs for 5,000 units:
Direct materials $60
Direct labor 30
Factory overhead (30% variable) 90
Selling expenses (50% variable) 30
Administrative expenses (30% variable) 15
Total per unit $225
Recently, a company approached Rippey Corporation about buying 1,000 units for $200. Currently, the models are sold to dealers for $300. Rippeys capacity is sufficient to produce the extra 1,000 units. No additional selling expenses would be incurred on the special order.
Required:
Should Rippey accept the special order if its goal is to maximize short-run profits? Justify your answer.
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started