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V. The Brown Company manufactures and sells a dish washer set that sells for $275. The per unit cost of manufacturing consists of direct materials
V. The Brown Company manufactures and sells a dish washer set that sells for $275. The per unit cost of manufacturing consists of direct materials of $80, direct labor of $90, variable overhead of $5, and allocated fixed overhead of $10. Variable selling and administrative expenses are $8 per unit; fixed selling and administrative expenses are $120,000. The Brown Company currently manufactures and sells 20,000 dish washers per year. A department store has approached the Brown Company with a special order for 5,000 dish washers that it will sell under the department store's own brand name. The department store is willing to pay $200 for each dish washer. If the special order is accepted, the other sales of the Brown Company will decrease by 1,000 dish washers. The Brown Company has sufficient idle capacity to produce the special order. Required: 1. Determine whether the Brown Company should accept the special order
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