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Calculate the available production capacity

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Question - A company produce bicyle bell. The capacity was 100,000 units, and the company is currently operating at 85% capacity. Variable manufacturing cost are $25 per unit. Fixed manufacturing cost are $900,000. The bicycle are normally sold to end customer at $60 each. A wholesaler negotiating a bulk purchase of 10,000 units at $35 per unit.

Required -

a. Calculate the available production capacity.

b. Calculate the contribution margin per unit for both the current production of compasses and the special order compansses.

c. Should the special order be accepted? Show calculations.

d. What is the opportunity cost if the wholesaler required 20,000 units? Would you recommend the special order for the requirement?

Reference no: EM133042615

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