The Trophy has just received a s special one-time order for 2,500 medals at $115 per medal. For this order, no variable marketing costs will be incurred. As management accountant with The Trophy, has been assigned the task of analyzing this order and recommending whether the company should accept or reject it. After examining the costs, you suggested to the controller that they request competitive bids from vendors for the raw materials, since the current quote seems high. The controller insisted that the prices are in line with those of other vendors.

Required: To earn full or partial marks, you need to show all calculations in good form.

1. Calculate both the old (i.e., prior to the special order) average cost per unit and the recalculated average cost per unit,

including the effect of the special sales order. Are either of these two figures relevant for evaluating whether to accept or reject the special

order? Explain.

2. What is the short-term effect on operating profit if The Trophy accepts the special sales order?

3. What is the breakeven selling price per unit for the special sales order?

4. Discuss at least three other considerations that you should include in your analysis of the special order.

Data
Current manufacturing capacity =		10,000	units per month
Current production output =			7,500	units per month
Normal sales price per unit =			$225.00
Current Product Costs:
Variable Costs:
Manufacturing:
Labor			$375,000
Material			$300,000
Marketing			$187,500
Total Variable Costs				$862,500
Fixed Costs:
Manufacturing			$275,000
Marketing			$225,000
Total Fixed Costs				$500,000
Total Cost			$1,362,500
Information regarding the special sales order:
Number of units			2,500
Offer price, per unit			$115.00