Stuebe manufacturing produces and sells teddy bears

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Reference no: EM13946611

Stuebe Manufacturing produces and sells Teddy Bears for $6.50 each. A foreign retailer has offered to purchase 20,000 Teddy Bears for $4.00 per Teddy. The current average manufacturing cost per Teddy is $4.50, $2.00 of variable cost and $2.50 of fixed cost. For this special order, Stuebe Manufacturing would have to pay $6,000 for special artwork for this customer. This special order would use manufacturing capacity that would otherwise be idle. No variable non-manufacturing costs would be incurred by the special order. Regular sales would not be affected by the special order.

Ø Should Steube Manufacturing accept the order?

Ø What is the impact on income if Steube accepts the order?

Reference no: EM13946611

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