Reference no: EM131400204
The Award Plus Company manufactures medals for winners of athletic events and other contests. Its manufacturing plant has the capacity to produce 10,000 medals each month. Current production and sales are 7,500 medals per month. The company normally charges $150 per medal. Cost information for the current activity level is as follows:
Variable costs that vary with number of units produced: Direct materials$ 262,500
Direct manufacturing labor 300,000
Variable costs (for setups, materials handling, quality control, and so on) that vary with number of batches, 150 batches * $500 per batch 75,000 Fixed Manufacturing Costs: 275,000
Fixed Marketing Costs: 175,000
Total Costs $ 1,087,500
Award plus has just received a special one-time-only order for 2,500 medals at $100 per medal.
Accepting the special order would not affect the company’s regular business. Award Plus makes
medals for its existing customers in batches of 50 medals (150 batches * 50 medals per batch = 7,500 medals). The special order requires Award Plus to make the medals in 25 batches of 100 each.
1. Should Award Plus accept this special order? Show your calculations.
2. Suppose plant capacity were only 9,000 medals instead of 10,000 medals each month. The special order must either be taken in full or rejected completely. Should Award Plus accept the special order? Show your calculations.
3. As in requirement 1, assume that monthly capacity is 10,000 medals. Award Plus is concerned that if it accepts the special order, its existing customers will immediately demand a price discount of $10 in the month in which the special order is being filled. They would argue that Award Plus’ capacity costs are now being spread over more units and that existing costumers should get the benefit of these lower costs. Should Award Plus accept the special order under these conditions? Show your calculations.
General superintendent of the rowland operation
: Norman Blankenship came in the side door of the office at Consolidation Coal Company's Rowland mine, near Clear Creek, West Virginia. He told the mine dispatcher not to tell anyone he was there. Norman was general superintendent of the Rowland operat..
|
Part of the strategic management process
: Briefly describe why the supply function at an organization must be part of the strategic management process. In your opinion should the supply function be part of the: (1) administration; (2) finance; (3) logistics, division of an organization:
|
Meaning maximizing stakeholder value
: Social responsibility for a business aligns into four key areas. First, economic - meaning maximizing stakeholder value; second - legal, abiding by all the laws and regulations; third - ethical, following standards of acceptable behavior; and fourth ..
|
Moving average and single exponential smoothing methods
: The first class of forecasting methods we cover are based on “averaging” past time series values to forecast. Restricting attention first to Moving Average and Single Exponential Smoothing (SES) methods, explain the difference between these two appro..
|
Should award plus accept this special order
: The Award Plus Company manufactures medals for winners of athletic events and other contests. Its manufacturing plant has the capacity to produce 10,000 medals each month. Current production and sales are 7,500 medals per month. Should Award Plus acc..
|
Identify whether the failure was legal or ethical
: WestJet apologized to Air Canada on Monday and will pay $15.5 million to settle a lawsuit over a case of corporate espionage. What were the points of failure in this incident? For each failure point, identify whether the failure was legal or ethical...
|
Calculate quencher unit variable product cost
: Quencher Beverage is a large regional retail establishment. At the beginning of the quarter Quencher decided to start selling one of its most popular products—Coca-Cola 10-packs— at a loss (i.e., a loss leader) in order to entice consumers to purchas..
|
Three levels-strategic/organization-task and person
: Needs assessment should be performed on three levels: strategic/organization, task and person. In this week’s Assignment, you will complete all three with a focus on task for your employee orientation program. The two Discussion topics for this unit ..
|
Determine which market segment to target
: Occasionally, a student will suggest that his or her product or service is universally needed, such as providing a haircut. Therefore, they plan to target everyone. Why is this not a good idea? What criteria should be used to determine which market s..
|