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The Flagship Medals Company manufactures medais for winners of athletic events and other contests. Its manufacturing plant has the capacity to produce 1 LDDD medals
The Flagship Medals Company manufactures medais for winners of athletic events and other contests. Its manufacturing plant has the capacity to produce 1 LDDD medals each month; current production and sales are Bt] medals per month. The company normally charges 52W per medal. Cost information tor the current activity level is provided in the accompanying table. a (Click the icon to view the cost information.) Flagship Medals has just received a special one-time-oniv order for 2.0% medals at$18tl per medal. Accepting the special order would not affect the company's regular business. Flagship Medals makes medals for its existing customers in batch sizes of SD medals {160 batches x 5!] medals per batch = BIND medal-s). The special order requires Flagship Medals to make the medals in 2|) batches of1tilJ each. mm Requirement 2. Suppose plant capacity was only 8,500 medals instead of 11,000 medals each month. The special order must either be taken in full or rejected totally. Should Flagship Medals accept the special order? Calculate the operating income with the one-time special order and the reduced plant capacity. (Round your answers to the nearest whole dollar. Use parentheses or a minus sign for negative amounts or operating losses.) With special order Sales Variable costs: Direct materials Direct manufacturing labour Batch variable costs Fixed costs: Fixed manufacturing costs Fixed marketing costs Total costs Operating incomeVariable costs (vary with units produced): Direct materials 288,000 Direct labour 320,000 Variable costs (vary with number of batches): 107.200* Setups, materials handling, quality control Fixed manufacturing costs 330,000 230,000 Fixed marketing costs 1,275,200 Total costs *Costs of $107,200 are based on 160 batches at $670 per batch
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