Winners Circle, Inc. manufactures medals for winners of athletic events and other contests. Its manufacturing plant has the capacity to produce 10,000 medals each month. Current monthly production is 7,500 medals. The company normally charges $175 per medal. Variable costs and fixed costs for the current activity level of 75 percent of capacity are as follows:

Production Costs

Variable Costs:

Manufacturing:

Direct labor $ 375,000

Direct material 262,500

Marketing 187,500

Total variable costs $ 825,000

Fixed Costs:

Manufacturing $ 275,000

Marketing 175,000

Total fixed costs $ 450,000

Total costs $1,275,000

Variable cost per unit $ 110

Fixed cost per unit 60

Average unit cost $ 170

Winners Circle has just received a special one-time order for 2,500 medals at $100 per medal. For this particular order, no variable marketing costs will be incurred. Cathy Donato, a management accountant with Winners Circle, has been assigned the task of analyzing this order and recommending whether the company should accept or reject it.

In a Word Document:

1. Identify and explain the costs that will be relevant to Cathy Donatos analysis of the special order being considered by Winners Circle, Inc.
2. Determine if Winners Circle should accept the special order. In explaining your answer, compute both the new average unit cost and the incremental unit cost for the special order. See Part 4 below.
3. Discuss any other considerations that Donato should include in her analysis of the special order.
4. Using the spreadsheet provided in the Assignment, construct an Excel spreadsheet to solve requirement 2.