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Sales Sales Total Sales $49,680 $ 23,910 $73,590 Costs Material 10,900 7,800 18,700 Labour 18,000 8,300 26,300 Amortization 6,900 3,400 10,300 Power 800 400 1,200
Sales Sales Total Sales $49,680 $ 23,910 $73,590 Costs Material 10,900 7,800 18,700 Labour 18,000 8,300 26,300 Amortization 6,900 3,400 10,300 Power 800 400 1,200 Rent 5,800 1,100 6,900 Heat and light 580 110 690 Other 300 1,000 1,300 Total costs 43,280 22,110 65,390 Income $ 6,400 $ 1,800 1,800 $ 8,200 The amortization charges are for machines used in the respective product lines. The power charge is apportioned based on an estimate of power consumed. The rent is for the building space, which has been leased for 10 years at $6,900 per year. The rent and the heat and lighting are apportioned to the product lines, based on the amount of floor space occupied. All other costs are current expenses identified with the product line causing them. A valued custom-parts customer has asked Chris if he would manufacture 5,000 special units for her. Chris is working at capacity and would have to give up some other business to take this order. He cannot renege on custom orders already agreed to, but he would have to reduce the output of his standard product by about one-half for a year while producing the specially requested customer part. The customer is willing to pay $6.61 for each part. The material cost will be about $2 per unit, and the labour will be $3.30 per unit. Chris will have to spend $1,800 for a special device that will be discarded when the job is done. | Your answer is correct. Calculate and present the following costs related to the 5,000-unit custom order: 1. The incremental cost of the order 28300 2. The full cost of the order (incremental plus allocated fixed costs, such as amortization, rent, etc.) 3. The opportunity cost of taking the order 28905 3205 LINK TO TEXT LINK TO TEXT LINK TO TEXT Your answer is partially correct. Try again. Should Chris take the order? The firm will be approximately 1455 better off by accepting the order
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