Ironwood Company manufactures a variety of sunglasses. Production information for its most popular line, the Clear Vista (CV), follows: Per Unit Sales price $ 51.50 Direct materials 20.00 Direct labor 10.00 Variable manufacturing overhead 6.00 Fixed manufacturing overhead 5.00 Total manufacturing cost $ 41.00 Suppose that Ironwood has been approached about producing a special order for 2,800 units of custom CV sunglasses for a new semiprofessional volleyball league. All units in the special order would be produced in the league’s signature colors with a specially designed logo emblem attached to the side of the glasses. The league has offered to pay $49.00 per unit in the special order. Additional costs for the special order total $3.00 per unit for mixing the special frame color and purchasing the emblem with the league’s logo that will be attached to the glasses.Required:1. Assume Ironwood has the idle capacity necessary to accommodate the special order. Calculate the additional contribution margin Ironwood would make by accepting the special order. 2-a. Calculate the current contribution margin per unit.
Ironwood Company manufactures a variety of sunglasses. Production information for its most popular line, the Clear Vista (CV), follows:
| Per Unit | ||
| Sales price | $ | 51.50 |
| Direct materials | 20.00 | |
| Direct labor | 10.00 | |
| Variable manufacturing |
6.00 | |
| Fixed manufacturing overhead | 5.00 | |
| Total |
$ | 41.00 |
Suppose that Ironwood has been approached about producing a special order for 2,800 units of custom CV sunglasses for a new semiprofessional volleyball league. All units in the special order would be produced in the league’s signature colors with a specially designed logo emblem attached to the side of the glasses. The league has offered to pay $49.00 per unit in the special order. Additional costs for the special order total $3.00 per unit for mixing the special frame color and purchasing the emblem with the league’s logo that will be attached to the glasses.
Required:
1. Assume Ironwood has the idle capacity necessary to accommodate the special order. Calculate the additional contribution margin Ironwood would make by accepting the special order.
2-a. Calculate the current contribution margin per unit.
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