The following data relate to M4 Engineering: Anticipated sales... Normal sales price/unit.. Variable manufacturing cost/unit...... Variable selling cost/unit.. $5 Fixed manufacturing cost.. $800,000 ($8.00/unit) Fixed selling cost $200,000 ($2.00/unit) Total cost/unit (full absorption)........ $25.00 M4 Engineering has the opportunity to take a one-time special order from a customer who wants to buy 20,000 units, but is only willing to pay $18.00 per unit. The special order will not affect M4's anticipated sales to other customers or the company's fixed costs. Should M4 Engineering accept the special order? Why or why not? Show your calculations. 100,000 units $32 $10
The following data relate to M4 Engineering: Anticipated sales... Normal sales price/unit.. Variable manufacturing cost/unit...... Variable selling cost/unit.. $5 Fixed manufacturing cost.. $800,000 ($8.00/unit) Fixed selling cost $200,000 ($2.00/unit) Total cost/unit (full absorption)........ $25.00 M4 Engineering has the opportunity to take a one-time special order from a customer who wants to buy 20,000 units, but is only willing to pay $18.00 per unit. The special order will not affect M4's anticipated sales to other customers or the company's fixed costs. Should M4 Engineering accept the special order? Why or why not? Show your calculations. 100,000 units $32 $10
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:The following data relate to M4 Engineering:
Anticipated sales...
Normal sales price/unit..
Variable manufacturing cost/unit......
Variable selling cost/unit..
Fixed manufacturing cost..
Fixed selling cost
Total cost/unit (full absorption).........
100,000 units
$32
$10
$5
$800,000 ($8.00/unit)
$200,000 ($2.00/unit)
$25.00
M4 Engineering has the opportunity to take a one-time special order from a customer who wants to buy 20,000 units, but is only willing to pay $18.00 per
unit. The special order will not affect M4's anticipated sales to other customers or the company's fixed costs.
Should M4 Engineering accept the special order? Why or why not? Show your calculations.
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