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The Sleigh Bells Company manufactures various Christmas gifts. One product, the Twelve Days of Christmas Tower, has the following full unit costs for 80,000 units:
The Sleigh Bells Company manufactures various Christmas gifts. One product, the Twelve Days of Christmas Tower, has the following full unit costs for 80,000 units: Direct materials Direct labor Manufacturing overhead (75% variable) Selling expenses (30% variable) $20 7 24 22 10 Administrative expenses (10% variable) Total per unit 5 $66 Kevin McCallister recently approached The Sleigh Bells Co with a special order to purchase 6,000 towers for $60. The Sleigh Bells Co currently sell the towers to consumers for $95. Capacity is sufficient to produce the extra 6,000 units. Variable selling expenses will be incurred on the special order. REQUIRED 1. Ignoring the special order, create a contribution margin income statement that shows the operating profit of the 80,000 towers The Sleigh Bells Co currently sells. 2. Determine the impact on profit of accepting the order. Should The Sleigh Bells Co accept the special order? 3. Determine the minimum price The Sleigh Bells Co would need on the special order so that before tax profits for the company would increase by $147,000 (over their current profit calculated in #1). Edit View Insert Format Tools Table
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