Using Data Analytics to Determine Costs to Be Used in a Special-Order Analysis

For this case, you will use selling price and cost data to determine if a special order from a customer should be accepted. Donut House wants to examine if it should accept a special order by a customer to purchase a large order of donuts; however, the customer wants the donuts to contain the company's logo, which will require an additional cost. 

Daily average unit selling prices and current unit costs to produce are provided. Unit costs vary depending on toppings and labor to produce even though all doughnuts are sold for the same unit price. Donuts with special toppings sell in approximately the same daily sales mix, and the special order will be sold in the same sales mix. As such, the company has decided to use average costs for the most recent month. Fixed costs are allocated to units based on direct labor costs. Demand for regular sales will not be affected if the special order is accepted. The average number of units sold each day does not differ significantly. 

Use the following template:

• Module 3 CTA Excel File TemplateDownload Module 3 CTA Excel File Template

Requirements

Use the provided Excel file, which include the special order Information to perform the following:

1. Determine the monthly average unit selling price, unit variable cost, unit allocated fixed, and average unit contribution margin.
2. Prepare a special-order analysis using the average amounts as calculated in part 1.
3. Should Donut House accept the special order based on your analysis? Explain why. Are there any qualitative considerations that Donut House should make prior to accepting the order? Be specific and creative in your answer here. It is important to recognize there are generally always qualitative and quantitative considerations making these types of decisions.