A company is currently operating at 70% capacity producing 8,000 units. Cost information relating to this current production is shown in the following table:

$$\begin{array} { | l | r | }
\hline & \text { Per Unit } \
\hline \text { Sales price } & \$ 15.00 \
\hline \text { Direct material } & \$ 3.20 \
\hline \text { Direct labor } & \$ 7.10 \
\hline \text { Variable overhead } & \$ 0.05 \
\hline \text { Fixed overhead } & \$ 0.60 \
\hline
\end{array}$$ The company has been approached by a customer with a request for a special order for 1,500 units. The sales price per unit for this special order is $10. Should the company accept the special order?

Question

A company is currently operating at 70% capacity producing 8,000 units. Cost information relating to this current production is shown in the following table:
 
$$\begin{array} { | l | r | } 
\hline & \text { Per Unit } \
\hline \text { Sales price } & \$ 15.00 \
\hline \text { Direct material } & \$ 3.20 \
\hline \text { Direct labor } & \$ 7.10 \
\hline \text { Variable overhead } & \$ 0.05 \
\hline \text { Fixed overhead } & \$ 0.60 \
\hline
\end{array}$$ The company has been approached by a customer with a request for a special order for 1,500 units. The sales price per unit for this special order is $10. Should the company accept the special order?

Quizplus · Accepted Answer

The Answer of A company is currently operating at 70% capacity producing 8,000 units. Cost information relating to this current production is shown in the following table:
 
$$\begin{array} { | l | r | } 
\hline & \text { Per Unit } \
\hline \text { Sales price } & \$ 15.00 \
\hline \text { Direct material } & \$ 3.20 \
\hline \text { Direct labor } & \$ 7.10 \
\hline \text { Variable overhead } & \$ 0.05 \
\hline \text { Fixed overhead } & \$ 0.60 \
\hline
\end{array}$$ The company has been approached by a customer with a request for a special order for 1,500 units. The sales price per unit for this special order is $10. Should the company accept the special order?

A Company Is Currently Operating at 70% Capacity Producing 8,000