Rundle Company manufactures a personal computer designed for use in schools and markets it under its own label. Rundle has the capacity to produce 31,000 units a year but is currently producing and selling only 19,000 units a year. The computer's normal selling price is $1,610 per unit with no volume discounts. The unit-level costs of the computer's production are $570 for direct materials, $250 for direct labor, and $130 for indirect unit-level manufacturing costs. The total product- and facility-level costs incurred by Rundle during the year are expected to be $2,290,000 and $800,000, respectively. Assume that Rundle receives a special order to produce and sell 3,070 computers at $1,200 each. Required Calculate the contribution to profit from the special order. Should Rundle accept or reject the special order? Contribution to profit
Rundle Company manufactures a personal computer designed for use in schools and markets it under its own label. Rundle has the capacity to produce 31,000 units a year but is currently producing and selling only 19,000 units a year. The computer's normal selling price is $1,610 per unit with no volume discounts. The unit-level costs of the computer's production are $570 for direct materials, $250 for direct labor, and $130 for indirect unit-level manufacturing costs. The total product- and facility-level costs incurred by Rundle during the year are expected to be $2,290,000 and $800,000, respectively. Assume that Rundle receives a special order to produce and sell 3,070 computers at $1,200 each. Required Calculate the contribution to profit from the special order. Should Rundle accept or reject the special order? Contribution to profit
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Vishnu
Transcribed Image Text:Problem: Module 6 Textbook Problem 3
Learning Objective: 6-2 Make appropriate special order decisions
Rundle Company manufactures a personal computer designed for use in schools and markets it under its own label. Rundle has the
capacity to produce 31,000 units a year but is currently producing and selling only 19,000 units a' year. The computer's normal selling
price is $1,610 per unit with no volume discounts. The unit-level costs of the computer's production are $570 for direct materials, $250
for direct labor, and $130 for indirect unit-level manufacturing costs. The total product- and facility-level costs incurred by Rundle
during the year are expected to be $2,290,000 and $800,000, respectively. Assume that Rundle receives a special order to produce
and sell 3,070 computers at $1,200 each.
Required
Calculate the contribution to profit from the special order. Should Rundle accept or reject the special order?
Contribution to profit
Should Rundle accept or reject the special order? Accept
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