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The Medallion company manufactures medals for sports club awards. Its plant has a capacity to produce 20,000 medals per month. Current production and sales are
The Medallion company manufactures medals for sports club awards. Its plant has a capacity to produce 20,000 medals per month. Current production and sales are 15,000 medals per month. The company normally sells the medals for $140 per medal. The cost information for the company is as follows: Variable costs that vary with number of units produced Total Direct materials $525,000 Total Direct labour 480,000 Other variable costs that vary with number of batches 150 batches of 50 medals per batch at $500 per batch Other costs include Fixed manufacturing cost $275,000 Fixed marketing cost 175,000 The Medallion company has received a Special order for 5000 medals at $90 per medal. This will have no effect on the company's regular business. For the special order the company would make 50 batches of 100 medals per batch. Required: (a)Should the Medal company accept the special order? Show calculations (b)Are there any other factors that should be considered
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