Question
The Cameron Trophy Company manufactures affordable trophies. At the beginning of the year, the Cameron Trophy Company received a request from a local sports team
The Cameron Trophy Company manufactures affordable trophies. At the beginning of the year, the Cameron Trophy Company received a request from a local sports team who would like to purchase 150 trophies for an upcoming state championship tournament; due to the large order the customer has offered to purchase each trophy for $20 (current selling price is $35 per unit). If the Cameron Trophy Company accepts the special order, they will have to hire a temporary supervisor for $450 and incur an additional $750 in custom packaging/wrapping. In addition, the order will require a special engraving tool that will cost $150. The entire amount allocated as fixed overhead will be incurred regardless of whether the Company accepts the special order. The company currently has the capacity to produce the 150 trophies without incurring any additional fixed costs for factory space:
Current Price Structure for each Trophy (excludes special order): | |
Direct Labor | $6 |
Direct Materials | $7 |
Fixed Overhead | $12 |
Total Cost per Unit | $25 |
What are the relevant costs, per trophy to be considered in accepting the special order?
Group of answer choices
$22
$13
$21
$25
Should the Cameron Trophy Company accept or reject the special offer?
Group of answer choices
Accept
Reject
How much profit (loss) will the Cameron Trophy Company incur if it accepts the special offer?
Group of answer choices
$300
($300)
$750
($750)
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