ook int Thornton Company manufactures a personal computer designed for use in schools and markets it under its own label. Thornton has the capacity to produce 37,000 units a year but is currently producing and selling only 12,000 units a year. The computer's normal selling price is $1,780 per unit with no volume discounts. The unit-level costs of the computer's production are $480 for direct materials, $130 for direct labor, and $140 for indirect unit-level manufacturing costs. The total product- and facility-level costs incurred by Thornton during the year are expected to be $2,210,000 and $804,000, respectively. Assume that Thornton receives a special order to produce and sell 3,120 computers at $1,230 each. Required Calculate the contribution to profit from the special order. Should Thornton accept or reject the special order? Contribution to profit Should Thomton accept or reject the special order?
ook int Thornton Company manufactures a personal computer designed for use in schools and markets it under its own label. Thornton has the capacity to produce 37,000 units a year but is currently producing and selling only 12,000 units a year. The computer's normal selling price is $1,780 per unit with no volume discounts. The unit-level costs of the computer's production are $480 for direct materials, $130 for direct labor, and $140 for indirect unit-level manufacturing costs. The total product- and facility-level costs incurred by Thornton during the year are expected to be $2,210,000 and $804,000, respectively. Assume that Thornton receives a special order to produce and sell 3,120 computers at $1,230 each. Required Calculate the contribution to profit from the special order. Should Thornton accept or reject the special order? Contribution to profit Should Thomton accept or reject the special order?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:ook
int
Thornton Company manufactures a personal computer designed for use in schools and markets it under its own label. Thornton has
the capacity to produce 37,000 units a year but is currently producing and selling only 12,000 units a year. The computer's normal
selling price is $1,780 per unit with no volume discounts. The unit-level costs of the computer's production are $480 for direct
materials, $130 for direct labor, and $140 for indirect unit-level manufacturing costs. The total product- and facility-level costs incurred
by Thornton during the year are expected to be $2,210,000 and $804,000, respectively. Assume that Thornton receives a special
order to produce and sell 3.120 computers at $1,230 each.
Required
Calculate the contribution to profit from the special order. Should Thornton accept or reject the special order?
Contribution to profit
Should Thomton accept or reject the special order?
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