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Should the company accept special order

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Reference no: EM13519209

Adamyan Co. manufactures and sells medals for winners of athletic and other events. Its manufacturing plant has the capacity to produce 15,000 medals each month; current monthly production is 12,750 medals. The company normally charges $120 per medal. Cost data for the current level of production are shown below:

Variable costs:

Direct materials

$624,750

Direct labor

$306,000

Selling and administrative

$15,300

Fixed costs:

Manufacturing

$506,175

Selling and administrative

$123,675

The company has just received a special one-time order for 700 medals at $83 each.

For this particular order, no variable selling and administrative costs would be incurred. This order would also have no effect on fixed costs.

Required

Should the company accept this special order? Why?

Reference no: EM13519209

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