Should the company accept the special order

Reference no: EM131922311

Question: Albertine Co. manufactures and sells trophies for winners of athletic and other events. Its manufacturing plant has the capacity to produce 16,000 trophies each month; current monthly production is 12,800 trophies. The company normally charges $110 per trophy. Cost data for the current level of production are shown below:

Variable costs:
Direct materials	$614,400
Direct labor	$256,000
Selling and administrative	$35,840
Fixed costs:
Manufacturing	$294,400
Selling and administrative	$94,720

The company has just received a special one-time order for 1,200 trophies at $58 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: (please show all work as to why you come to your conclusion)

Should the company accept this special order? Why?

Reference no: EM131922311

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