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Calculate the relevant cost per unit for the special order

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Reference no: EM132465893

Finch Quilting Company makes blankets that it markets through a variety of department stores. It makes the blankets in batches of 1,000 units. Finch made 26,000 blankets during the prior accounting period. The cost of producing the blankets is summarized here.

Materials cost ($24 per unit x 26,000)              $ 624,000

Labor cost ($19 per unit x 26,000)                    494,000

Manufacturing supplies ($2 x 26,000)                   52,000

Batch-level costs (26 batches at $8,000 per

208,000

batch)

Product-level costs                                          280,000

Facility-level costs                                          310,000

Total costs                                                  $1,968,000

Cost per unit = $1,968,000 + 26,000 = $75.7

Required

Question 1: Sunny Motels has offered to buy a batch of 400 blankets for $60 each. Finch's normal selling price is $96 per unit. Calculate the relevant cost per unit for the special order. Based on the preceding quantitative data, should Finch accept the special order?

Question 2: Sunny offered to buy a batch of 1,000 blankets for $60 per unit, calculate the relevant cost per unit for the special order. Should Finch accept the special order?

Reference no: EM132465893

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