Business Opportunity #1, Special Order: Another wedding cake company, Moon Dog Cake Company, has contacted Mr. Suncat with a special request. Moon Dog Cake Company needs some wedding cakes decorated. Moon Dog is proposing that they will bake the cake and deliver the undecorated wedding cakes to Suncat Cake Shop. Moon Dog is willing to pay Mr. Suncat $425 for each decorated wedding cake. Mr. Suncat knows that his Cake Shop has the capacity to take on the special order from Moon Dog Cake Company. Mr. Suncat also knows that the direct material and direct labor cost to decorate each wedding cake will be $375. Mr. Suncat’s manufacturing overhead per cake is $70.00 and that 65% of that amount is fixed. Should Mr. Suncat accept or reject Mood Dog Cake Company’s special request and why? Show all calculations to support your answer.
Business Opportunity #1, Special Order:
Another wedding cake company, Moon Dog Cake Company, has contacted Mr. Suncat with a special request. Moon Dog Cake Company needs some wedding cakes decorated. Moon Dog is proposing that they will bake the cake and deliver the undecorated wedding cakes to Suncat Cake Shop. Moon Dog is willing to pay Mr. Suncat $425 for each decorated wedding cake.
Mr. Suncat knows that his Cake Shop has the capacity to take on the special order from Moon Dog Cake Company. Mr. Suncat also knows that the direct material and direct labor cost to decorate each wedding cake will be $375. Mr. Suncat’s manufacturing overhead per cake is $70.00 and that 65% of that amount is fixed.
Should Mr. Suncat accept or reject Mood Dog Cake Company’s special request and why? Show all calculations to support your answer.
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