Reference no: EM132796644
Audio Company produces sound systems for cars and sells them to auto manufacturers for $100 each. Full capacity is 20,000 systems per month but Audio Company is currently producing 18,000 systems per month for its regular customers. The company reports the following monthly results:
Per Unit Total
Revenue $100 $1,800,000
Direct Materials 25 450,000
Direct Manufacturing Labor 10 180,000
Variable Manufacturing Overhead 22 396,000
Fixed Manufacturing Overhead 3 54,000
Variable Selling expenses 19 342,000
Fixed Selling expenses 2 36,000
Total Costs 81 1,458,000
Operating income $19 $342,000
Problem 1: Audio's manager receives a call regarding a one-time special order. Ted's Automotive needs systems and will pay $65 per system. There will be no selling expenses incurred for this special order. Should Audio Company accept this one-time special order? Show your calculations.
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: Ted's Automotive needs systems and will pay $65 per system. Should Audio Company accept this one-time special order? Show your calculations.
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