Unearthed Company makes small widgets. The manufacturing costs per unit to produce a widget are as follows:Direct Materials $200Direct Labour $150Variable Manufacturing Overhead $125Fixed Manufacturing Overhead $90Total Manufacturing Costs $565Variable selling costs to obtain and fill orders normally average $4 per unit when Unearthed sells widgets locally. Unearthed has recently paid $120,000 to advertise in an international magazine. Unearthed has just received an order from a British Company for 1,000 widgets for a total offering price of $450,000. The British Company will pay all shipping charges except the initial packaging costs which are expected to be $1.50 per widget. Unearthed has excess capacity. Should Unearthed Company accept this one time only special order?
Unearthed Company makes small widgets. The
Direct Materials $200
Direct Labour $150
Variable Manufacturing
Fixed Manufacturing Overhead $90
Total Manufacturing Costs $565
Variable selling costs to obtain and fill orders normally average $4 per unit when Unearthed sells widgets locally. Unearthed has recently paid $120,000 to advertise in an international magazine. Unearthed has just received an order from a British Company for 1,000 widgets for a total offering price of $450,000. The British Company will pay all shipping charges except the initial packaging costs which are expected to be $1.50 per widget. Unearthed has excess capacity. Should Unearthed Company accept this one time only special order?
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