Solution-Should you accept a special sales order

Should you accept a special sales order

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Reference no: EM132182071

Question - Low - water Sailmakers manufactures sails for sailboats. The company has the capacity to produce 25,000 sails per year, and is currently producing and selling 20,000 sails per year.

The following information relates to current production:

Sale price per unit	$150
Variable costs per unit:
Manufacturing	$55
Marketing and administrative	$25
Total fixed costs:
Manufacturing	$640,000
Marketing and administrative	$280,000

a. Should you accept a special sales order for 5,000 sails at a price of $100 per unit? Fixed costs will be increased by $10,000? Give numerical justification for your answer.

b. Would your answer be different if you were currently producing and selling 23,000 sails?

Reference no: EM132182071

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Should you accept a special sales order

Reference no: EM132182071

Reference no: EM132182071

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