Solution-Should the company accept the special order and why

Should the company accept the special order and why

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Reference no: EM132795675

Albertine Co. manufactures and sells trophies for winners of athletics 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 P113 per trophy.

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

Variable costs:

Direct materials .......................... P614,400
Direct labor ................................. P256,000
Selling and administrative .......... P35,840

Fixed costs:

Manufacturing ............................ P294,400
Selling and administrative .......... P94,720

The company has just received a special one-time order for 1,200 trophies at P61 each. In this particular order, no variable selling or administrative costs will be incurred. This order would also have no effect on fixed costs.

Required:

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

Reference no: EM132795675

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Should the company accept the special order and why

Reference no: EM132795675

Reference no: EM132795675

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