Variable costs that vary with number of units produced Direct materials $ 600,000 Direct manufacturing labor 700,000 Variable costs (for setups, materials handling, quality control, and so on) that vary with number of batches, 100 batches × $1,500 per batch 150,000 Fixed manufacturing costs 250,000 Fixed marketing costs 400,000 Total costs $ 2,1
Variable costs that vary with number of units produced Direct materials $ 600,000 Direct manufacturing labor 700,000 Variable costs (for setups, materials handling, quality control, and so on) that vary with number of batches, 100 batches × $1,500 per batch 150,000 Fixed
1. Should Reward One accept this special order? Show your calculations.
2. Suppose plant capacity were only 11,000 windows instead of 12,000 windows each month. The special order must either be taken in full or be rejected completely. Should accept the special order? Show your calculations.
3. As in requirement 1, assume that monthly capacity is 12,000 windows. is concerned that if it accepts the special order, its existing customers will immediately demand a price discount of $20 in the month in which the special order is being filled. They would argue that 's capacity costs are now being spread over more units and that existing customers should get the benefit of these lower costs. Should accept the special order under these conditions? Show your calculations.
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