Anglen Company manufactures and sells trophies for winners of athletic and other events. Its manufacturing plant has the capacity to produce 18,400 trophies each month; current monthly production is 14,880 trophies. The company normally charges $105.00 per trophy. Cost data for the current level of production are shown below: Variable costs: Direct materials Direct labor Selling and administrative Fixed costs: Manufacturing Selling and administrative $ 462,800 $ 323,300 $ 17,440 $ 406,840 $ 75,680 The company has just received a special one-time order for 920 trophies at $48.80 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? Why? Note: Do not round your intermediate calculations. Round your answer to 2 decimal places. Accepting the order has a financial disadvantage of per trophy. Therefore the company should not accept the order.
Anglen Company manufactures and sells trophies for winners of athletic and other events. Its manufacturing plant has the capacity to produce 18,400 trophies each month; current monthly production is 14,880 trophies. The company normally charges $105.00 per trophy. Cost data for the current level of production are shown below: Variable costs: Direct materials Direct labor Selling and administrative Fixed costs: Manufacturing Selling and administrative $ 462,800 $ 323,300 $ 17,440 $ 406,840 $ 75,680 The company has just received a special one-time order for 920 trophies at $48.80 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? Why? Note: Do not round your intermediate calculations. Round your answer to 2 decimal places. Accepting the order has a financial disadvantage of per trophy. Therefore the company should not accept the order.
Chapter2: Building Blocks Of Managerial Accounting
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