Anglen Company manufactures and sells trophies for winners of athletic and other events. Its manufacturing plant has the capacity to produce 18,400 trophies each month; current monthly production is 14,880 trophies. The company normally charges $105.00 per trophy. Cost data for the current level of production are shown below: Variable costs: Direct materials Direct labor Selling and administrative Fixed costs: Manufacturing Selling and administrative $ 462,800 $ 323,300 $ 17,440 $ 406,840 $ 75,680 The company has just received a special one-time order for 920 trophies at $48.80 each. For this particular order, no variable selling and administrative costs would be incurred. This order would also have no effect on fixed costs. Assume that direct labor is a variable cost. Required: Should the company accept this special order? Why? Note: Do not round your intermediate calculations. Round your answer to 2 decimal places. Accepting the order has a financial disadvantage of per trophy. Therefore the company should not accept the order.
Anglen Company manufactures and sells trophies for winners of athletic and other events. Its manufacturing plant has the capacity to produce 18,400 trophies each month; current monthly production is 14,880 trophies. The company normally charges $105.00 per trophy. Cost data for the current level of production are shown below: Variable costs: Direct materials Direct labor Selling and administrative Fixed costs: Manufacturing Selling and administrative $ 462,800 $ 323,300 $ 17,440 $ 406,840 $ 75,680 The company has just received a special one-time order for 920 trophies at $48.80 each. For this particular order, no variable selling and administrative costs would be incurred. This order would also have no effect on fixed costs. Assume that direct labor is a variable cost. Required: Should the company accept this special order? Why? Note: Do not round your intermediate calculations. Round your answer to 2 decimal places. Accepting the order has a financial disadvantage of per trophy. Therefore the company should not accept the order.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
None
Transcribed Image Text:Anglen Company manufactures and sells trophies for winners of athletic and other events. Its manufacturing plant has the capacity to
produce 18,400 trophies each month; current monthly production is 14,880 trophies. The company normally charges $105.00 per
trophy. Cost data for the current level of production are shown below:
Variable costs:
Direct materials
Direct labor
Selling and administrative
Fixed costs:
Manufacturing
Selling and administrative
$ 462,800
$ 323,300
$ 17,440
$ 406,840
$ 75,680
The company has just received a special one-time order for 920 trophies at $48.80 each. For this particular order, no variable selling
and administrative costs would be incurred. This order would also have no effect on fixed costs. Assume that direct labor is a variable
cost.
Required:
Should the company accept this special order? Why?
Note: Do not round your intermediate calculations. Round your answer to 2 decimal places.
Accepting the order has a financial
disadvantage
of
per trophy. Therefore the company
should not
accept the order.
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by step
Solved in 2 steps
Recommended textbooks for you
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education