Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Winner Inc. manufactures athletic medals. It has capacity to produce 2,500 medals a month, but its current production is 1,875 medals. It nows has
Winner Inc. manufactures athletic medals. It has capacity to produce 2,500 medals a month, but its current production is 1,875 medals. It nows has the chance to get full production with an order for 625 medals. Variable and fixed costs for the current level of 75% of capacity are as follows: Production Costs (at 75% of capacity--1,875 medals) Variable costs: Manufacturing Marketing Total variable costs Fixed costs Direct labour $ 281,250 Direct material 196,875 140,625 $ 618,750 Manufacturing Marketing Total fixed costs $ 206,250 131,250 $ 337,500 Total costs Variable cost per unit $ 330 Fixed cost per unit 180 Average unit cost $ 510 $ 956,250 Winner Inc. has just received a special one time order for 625 medals at $300 per medal. For this particular order, no variable marketing costs will be incurred. However, a special machine will be required for this order, which will cost $20,000 and have no salvage value at the end of the order. Required: If the order is accepted, how much will the income change?
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started