Advise management whether to accept or reject special order

Reference no: EM132780004

Question: (i) Special Order Decision

Missoula Industries manufactures a product with the following costs per unit at the expected production of 30,000 units:

Direct materials $5

Direct labor 15

Variable manufacturing overhead 8

Fixed manufacturing overhead 6

The company has the capacity to produce 60,000 units. The product regularly sells for $45. A wholesaler has offered to pay $40 each for 2,000 units.

Required: Based on your analysis, advise management whether to accept or reject the special order.

Reference no: EM132780004

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