TIM Company produces modem SS12 model for home internet connection. The

company has been recognized as the best modem producer in the country. Therefore, TIM

Company has received a special order from Brother Inc. for 1,200 units modems at $500

per modem. Its manufacturing plant has the capacity to produce 13,200 units modem each

month. With 12,000 units modem of current production and sales per month, TIM

Company normally sets $550 selling price per unit. The following is the cost information

for the current activity level:

Variable costs:

Direct materials ($552,000)

Direct manufacturing labor (480,000)

Variable costs (for setups, materials handling, and quality control)

1,000 x $250 per dozen* (250,000)

Fixed costs:

Fixed manufacturing costs (450,000)

Fixed advertising costs (375,000)

Total costs ($2,107,000)

*Per dozen is 12 units modem

Required:

Should TIM Company accept this special order? Show your calculations!

Question 2:

TIM manufactures and sells SS12 modem sets and uses standard costing. The following

is actual data for January, February, and March 2017:

Unit data Beginning entry Production Sales Variable costs Manufacturing cost per unit produced Operating (marketing) cost per unit sold Fixed costs Manufacturing costs Operating (marketing) costs January February March 0 100 100 1,400 1375 1430 1,300 1375 1455 $ 950 $725 $490,000 $490,000 $490,000 $120,000 $120,000 $120,000