Question
The Amalfi Corporation makes decorative vases for discerning collectors. While there are many different types of vases, the manufacturing process is very similar and differs
The Amalfi Corporation makes decorative vases for discerning collectors. While there are many different types of vases, the manufacturing process is very similar and differs only in cosmetic details. The firm operated at capacity in 2020. Data for 2020 is presented below.
| total | |||
| selling price | $3,320,000 | ||
| direct material | $1,230,000 | ||
| direct labor | $559,000 | ||
| fixed manufacturing OH | $729,000 | ||
| gross profit | $802,000 | ||
| fixed SG&A | $255,000 | ||
| sales commissions (% of price) | $365,200 | ||
| gross profit | $181,800 | ||
| current sales and production volume | 19,200 | ||
| production capacity | 20,400 | ||
One of Amalfi's long-term customers is an art dealer in NYC. This dealer has had a large order cancelled and wants to know if Amalfi can provide a special order of vases this month. Sales commissions will be paid at half the usual rate. Details of the special order are presented below.
| number of vases for special order | 2,400 | ||
| requested price per vase | $140.00 | ||
| one time design costs for NYC dealer order | $22,500 | ||
1. Calculate the CM for the special order. (2 points)
| price | |||
| DM | |||
| DL | |||
| fixed manufacturing OH | |||
| fixed SG&A | |||
| sales commissions | |||
| CM per unit | |||
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