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Should the company accept this special order

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Question - Kneller Co. manufactures and sells medals for winners of athletic and other events. Its manufacturing plant has the capacity to produce 22,000 medals each month; current monthly production is 10,000 medals. The company normally charges $86 per medal. Cost data for the current level of production are shown below:

Variable costs: Direct materials $416,900

Direct labor $133,400

Selling and administrative $21,600

Fixed costs: Manufacturing $124,600

Selling and administrative $68,200

The company has just received a special one-time order for 400 medals at $74 each. For this particular order, no variable selling and administrative costs would be incurred. This order would also have no effect on fixed costs. Assume that direct labor is a variable cost.

Required - Should the company accept this special order?

Reference no: EM132992118

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