Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Special-Order Decision, Traditional Analysis, Qualitative Aspects Feinan Sports, Inc., manufactures sporting equipment, including weight-lifting gloves. A national sporting goods chain recently submitted a special
Special-Order Decision, Traditional Analysis, Qualitative Aspects Feinan Sports, Inc., manufactures sporting equipment, including weight-lifting gloves. A national sporting goods chain recently submitted a special order for 5,000 pairs of weight-lifting gloves. Feinan Sports was not operating at capacity and could use the extra business. Unfortunately, the order's offering price of $12.70 per pair was below the cost to produce them. The controller was opposed to taking a loss on the deal. However, the personnel manager argued in favor of accepting the order even though a loss would be incurred; it would avoid the problem of layoffs and would help maintain the community image of the company. The full cost to produce a pair of weight- lifting gloves is presented below. Direct materials $7.40 Direct labor 3.80 Variable overhead 1.60 Fixed overhead Total 3.10 $15.90 No variable selling or administrative expenses would be associated with the order. Non-unit-level activity costs are a small percentage of total costs and are therefore not considered. 1. Assume that the company would accept the order only if it increased total profits. Should the company accept or reject the order? Provide supporting computations. If required, round your answers to the nearest cent. Enter a loss as a negative amount. Incremental revenue per pair Incremental cost per pair Incremental gain (loss) per pair Total In income: 2. Suppose that Feinan Sports har nanoti
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