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Recently a company approached rippey corporation about

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Reference no: EM13596284

Rippey Corporation manufactures a single product witht he following unit costs for 5,000 units:

  • Direct materials: 60
  • Direct labor: 30
  • Factory overhead (40% variable): 90
  • Selling expense (60% variable): 30
  • Administrative expenses (20% variable) 15
  • Total per unit: 225

Recently, a company approached Rippey Corporation about buying 1,000 units for $225. Currently, the Models are sold to dealers for $412.50. Rippey's capacity is sufficient to produce the extra 1,000 units. Ne additional selling expenses would be incurred on the special order.

Required:

  1. Should Rippey accept the special order if its goal is to maximize short-run profits?
  2. How much will income be affected if Rippey accepts the special order?

Reference no: EM13596284

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