The MedalCanada Company manufactures medals for winners of athletic events and other contests. Its manufacturing plant has the capacity to produce 10,800 medals eachmonth; current production and sales are 8,000 medals per month. The company normally charges $190 per medal. Cost information for the current activity level is provided in the accompanying table.

Cost information:

Variable costs (vary with units produced):

Direct materials

$ 344,000

Direct labour

368,000

Variable costs (vary with number of batches):

138,000*

Setups, materials handling, quality control

Fixed manufacturing costs

305,000

Fixed marketing costs

218,000

Total costs

$1,373,000

*Costs of $138,000 are based on 200 batches at $690 per batch.

MedalCanada has just received a specialone-time-only order for 2,000 medals at $175 per medal. Accepting the special order would not affect thecompany's regular business. MedalCanada makes medals for its existing customers in batch sizes of 40 medals (200 batches x 40 medals per batch=8,000 medals). The special order requires MedalCanada to make the medals in 25 batches of 80 each.

Required:

1. Should MedalCanada accept this specialorder? Explain briefly.
2. Suppose plant capacity was only 9,400 medals instead of 10,800 medals each month. The special order must either be taken in full or rejected totally. Should MedalCanada accept the specialorder?
3. As in requirement1, assume that monthly capacity is 10,800 medals. MedalCanada is concerned that if it accepts the specialorder, its existing customers will immediately demand a price discount of $10 in the month in which the special order is being filled. They would argue that MedalCanada's capacity costs are now being spread over more units and that existing customers should get the benefit of these lower costs. Should MedalCanada accept the special order under theseconditions?

The Medal Canada Company manufactures medals for winners of athletic events and other contests. Its manufacturing plant has the capacity to produce 10,800 medals each month; current production and sales are 8,000 medals per month. The company normally charges $190 per medal. Cost information for the current activity level is provided in the accompanying table. a (Click the icon to view the cost information.) Medal Canada has just received a special one-time-cnly order for 2,000 medals at $175 per medal. Accepting the special order would not affect the company's regular business. Medal Canada makes medals for its existing customers in batch sizes of 40 medals (200 batches x 40 medals per batch = 8,000 medals). The special order requires Medal Canada to make the medals in 25 batches of 80 each. Ruired Total costs 1,373,000 1,568,250 195,250 Operating income 3 147,000 $ 301,750 $ 154,750 Complete the sentence below. (Round your answer to the nearest whole dollar. Enter a positive amount only.) Medal Canada should accept the order because accepting the order increases the operating income by $ 154750 . Requirement 2. Suppose plant capacity was only 9,400 medals instead of 10,800 medals each month. The special order must either be taken in full or rejected totally. Should Medal Canada 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 0 Required 0 Cost information Sales 1756000 Variable costs: Direct materials 404200 . Should Medal Canada accept this special order? Explain briey. Variable costs (vary with units produced): Direct manufacturing labour 432400 . Suppose plant capacity was only 9,400 medals instead of 10,800 medals Direct materials 344,000 eam month. The special order must either be taken in full or rejected totally. Batch variable costs Should Medal Canada accept the special order? Direct labour 368,000 Fixed costs: - AS in requirement 1! 355110191031 "1001le 03930\")! is 10,500 medals. Variable costs (vary with number of batches): 138,000' ' . Medal Canada is concerned that it it accepts the special order, its existing _ . ' Fixed manufacturing costs customers will immediately demand a price discount of $10 in the month in Setups, materials handling, quality control Fixed marketing costs which the specral order rs being lled. They_wou|d argue that _ Fixed manufacturing costs 305,000 Medal Canada's capacity costs are now being spread over more units and Total costs that existing customers should get the benet of these lower costs. Should Fixed marketing costs 218'000 Medal Canada accept the special order under these conditions? $ 1 373 000 Operating income = TOW 505's _ 7 *Costs of $138,000 are based on 200 batches at $690 per batch. Enter any number in the edit fields and then click Check ' Print Done 3 parts ' Print Done ' remaining _