Reference no: EM133163585

Question - Winona Johnson is the president of Johnson Mfg., which manufactures coats. She is trying to decide whether to make 3,000 Type III coats or purchase them from a subcontractor to fill a rush special order that she just received. There are no marketing costs on the special order. Acceptance of the special order would not necessitate any premium pay for overtime work or additional fixed costs. Johnson Mfg. has supplied the following data:

Data for type III Coats

Sales Price $42

Direct Materials 15

Direct Labor 9

Fixed Mfg Overhead 3

Variable mfg Overhead 6

Variable Marketing Costs 3

Fixed Marketing Costs 1

Fixed Admin Overhead 2

Required -

A. What are the potential strategic issues related to this decision?

B. In addition to the cost information presented in the case, what other data would benefit Ms. Johnson as she makes her decision?

C. Discuss the options Ms. Johnson is facing, incorporating the information from parts A and B.

D. Select a recommendation. Make sure you address how the issues from parts A and B would affect your decision.