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Should the company accept this special order

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Reference no: EM131692601

Hampton Company 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

Hampton Company 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 the company accept this special order? Please state your decision and provide numerical support for your decision.

Reference no: EM131692601

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