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Find should the company accept the special order and why

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Reference no: EM132540293

Albertine Co. manufactures and sells trophies for winners of athletic and other events. Its manufacturing plant has the capacity to produce 16,000 trophies each month; current monthly production is 12,800 trophies. The company normally charges $113 per trophy.

Cost data for the current level of production are shown below:

Variable costs:

Direct materials .......................... $614,400

Direct labor ................................. $256,000

Selling and administrative .......... $35,840

Fixed costs:

Manufacturing ............................ $294,400

Selling and administrative .......... $94,720

The company has just received a special one-time order for 1,200 trophies at $61 each. For this particular order, no variable selling and administrative costs would be incurred. This order would also have no effect on fixed costs.

Question 1: Should the company accept this special order? Why?

Reference no: EM132540293

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