Baird Company manufactures a personal computer designed for use in schools and markets it under its own label. Baird has the capacity to produce 42,000 units a year but is currently producing and selling only 17,000 units a year. The computer's normal selling price is $1,800 per unit with no volume discounts. The unit-level costs of the computer's production are $490 for direct materials, $260 for direct labor, and $130 for indirect unit-level manufacturing costs. The total product- and facility- level costs incurred by Baird during the year are expected to be $2,120,000 and $809,000, respectively. Assume that Baird receives a special order to produce and sell 3,100 computers at $1,220 each. Required Calculate the contribution to profit from the special order. Should Baird accept or reject the special order? Contribution to profit Should Baird accept or reject the special order?
Baird Company manufactures a personal computer designed for use in schools and markets it under its own label. Baird has the capacity to produce 42,000 units a year but is currently producing and selling only 17,000 units a year. The computer's normal selling price is $1,800 per unit with no volume discounts. The unit-level costs of the computer's production are $490 for direct materials, $260 for direct labor, and $130 for indirect unit-level manufacturing costs. The total product- and facility- level costs incurred by Baird during the year are expected to be $2,120,000 and $809,000, respectively. Assume that Baird receives a special order to produce and sell 3,100 computers at $1,220 each. Required Calculate the contribution to profit from the special order. Should Baird accept or reject the special order? Contribution to profit Should Baird accept or reject the special order?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Baird Company manufactures a personal computer designed for use in schools and markets it under its own label. Baird has
the capacity to produce 42,000 units a year but is currently producing and selling only 17,000 units a year. The computer's
normal selling price is $1,800 per unit with no volume discounts. The unit-level costs of the computer's production are $490
for direct materials, $260 for direct labor, and $130 for indirect unit-level manufacturing costs. The total product- and facility-
level costs incurred by Baird during the year are expected to be $2,120,000 and $809,000, respectively. Assume that Baird
receives a special order to produce and sell 3,100 computers at $1,220 each.
Required
Calculate the contribution to profit from the special order. Should Baird accept or reject the special order?
Contribution to profit
Should Baird accept or reject the special order?
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