Kneller Co. manufactures and sells medals for winners of athletic and other events. Its manufacturing plant has the capacity to produce 30,000 medals each month; current monthly production is 10,000 medals. The company normally charges $119 per medal. Cost data for the current level of production are shown below:         Variable costs:     Direct materials $ 576,900 Direct labor $ 184,600 Selling and administrative $ 29,900 Fixed costs:     Manufacturing $ 172,600 Selling and administrative $ 94,400     The company has just received a special one-time order for 500 medals at $108 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?   multiple choice Accepted Not accepted

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
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Chapter1: Financial Statements And Business Decisions
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Kneller Co. manufactures and sells medals for winners of athletic and other events. Its manufacturing plant has the capacity to produce 30,000 medals each month; current monthly production is 10,000 medals. The company normally charges $119 per medal. Cost data for the current level of production are shown below:

 

     
Variable costs:    
Direct materials $ 576,900
Direct labor $ 184,600
Selling and administrative $ 29,900
Fixed costs:    
Manufacturing $ 172,600
Selling and administrative $ 94,400
 

 

The company has just received a special one-time order for 500 medals at $108 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?

 

multiple choice

  • Accepted
  • Not accepted

 

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