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Award Plus manufactures medals for winners of athletic events and other contests. Its manufacturing plant has the capacity to produce 10,000 medals each month. Current production and sales are 6300 medals per month. The company normally charge $150 per medal. Cost information for the current activity level is as follows:
Variable costs that vary with number of unis produced
Direct materials
$288,000
Direct manufacturing labour
$303,000
Variable costs (for set-ups, material handling quality control and so on)
That vary with number of batches, 126 batches x $478 per batch
$60228
Fixed manufacturing costs
$275,000
Fixed marketing costs
$175,000
Award Plus has just received a special one-time only order for 3700 medals at $85 per medal. Accepting the special order would not affect the company's regular business. Award Plus makes medals for its existing customers in batch sizes of 50 medals (126 batches x 50 medals per batch = 6300 medals). The special order requires Award Plus to make the medals in 37 batches of 100 each.
Calculate and enter the amount of incremental profit or incremental loss (show negative figure) in the answer block below
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