Reference no: EM133033263

Question - You are the accountant for Mrs Black's Business. Mrs Black makes and sells widgets to local farmers produced in an owned warehouse. Currently Mrs Black employs Miss Blue to look after the whole operation and pays her a salary of $100,000 per year. Currently widgets are the only product line Mrs Black manufactures.

Currently, production and sales information for the year are as follows;

Maximum production capacity of the warehouse: 25,000 units

Current production capacity: 20,000 units

Selling price per unit: $20

Raw materials cost per unit: $10

Variable labour cost per unit: $2

Fixed production costs: $40,000

Mr Grey has approached you and would like to buy 10,000 widgets in a one-off special order. She is willing to pay $15 per widget.

Required -

1) In Excel, based on current production and sales information calculate the break-even volume (units) and the sales $ value at the break-even point. Show all workings.

2) Would you accept the special order? Show your analysis and workings in Excel and state your recommendation clearly with reasoning.