The Gold Plus Company manufactures windows. Its manufacturing plant has the capacity to produce 11,000 windows each month. Current production and sales are 10,000 windows per month. The company normally charges $250 per window.

Gold Plus has just received a special one-time-only order for 1,000 windows at $200 per window. Accepting the special order would not affect the company's regular business or its fixed costs.

Gold Plus makes windows for its existing customers in batch sizes of 250 windows (40 batches 250 windows per batch = 10,000 windows). The special order requires Gold Plus to make the windows in 8 batches of 125 windows.

Direct materials $ 400,000

Direct manufacturing labor 350,000

Variable costs (for setups, materials handling, quality control, and so on) that vary with number of batches, 40 batches $800 per batch 32,000

Fixed manufacturing costs 75,000

Fixed marketing costs 150,000

Total costs $ 1,007,000

Requirement 2. Suppose plant capacity were only

10,500

windows instead of

11,000

windows each month. The special order must either be taken in full or be rejected completely. Should

Gold Plus

accept the special order? Show your calculations.

Complete the analysis below to determine if

Gold Plus

should accept the special order under this scenario.

		With One-Time
		Only Special Order
		Under Reduced
		Plant Capacity
		10,500 Windows
Revenues		2625000
Variable costs:
	Direct materials
	Direct manufacturing labor
	Batch manufacturing costs
Fixed costs:
	Fixed manufacturing costs
	Fixed marketing costs
Total costs
Operating income