Should mayflower corp accept this special order

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Question - Mayflower Corp manufactures and sells medals for winners of athletic events. The company normally charges $33 per medal. The average costs for a medal is shown below.

Direct materials:                                    $12

Direct labor:                                          8

Variable manufacturing overhead:           6

Variable marketing expenses:                 2

Fixed manufacturing overhead:               10 ($500,000 fixed manufacturing overhead/50,000 medals)

Total costs:                                           $38

Mayflower Corp has enough idle capacity to accept a one-time only special order for 5,000 medals at $25 per medal. Hampton Company will not incur any variable marketing expenses for this order and no additional fixed costs.

Required - Should Mayflower Corp accept this special order? Please state your decision and provide numerical support for your decision.

Reference no: EM131690696

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