The manufacturing plant of Carilla Ltd. specializes in crafting specialized pieces for camival. With a monthly production capacity of 15,000 pieces, the company currently manufactures and sells 11,000 pieces per month. Typically priced at $200 per piece, the company's cost breakdown for the ongoing production level is outlined below: Variable costs that vary with number of units produced Direct materials $440,000 Direct manufacturing labor 495,000 Variable costs (for setups, materials handling, quality control, etc.) that vary with number of batches, 220 batches * $500 per batch 110,000 ⚫ Fixed Costs Fixed manufacturing costs Fixed marketing costs Total costs 300,000 200,000 $1,545,000 Carilla has just received a special one-time-only order for 4,000 pieces at $150 per piece. Accepting the special order would not affect the company's regular business. Carilla makes pieces for its existing customers in batch sizes of 50 pieces (220 batches 50 pieces per batch = 11,000 pieces). The special order requires Carilla to make the pieces in 40 batches of 100 each.
The manufacturing plant of Carilla Ltd. specializes in crafting specialized pieces for camival. With a monthly production capacity of 15,000 pieces, the company currently manufactures and sells 11,000 pieces per month. Typically priced at $200 per piece, the company's cost breakdown for the ongoing production level is outlined below: Variable costs that vary with number of units produced Direct materials $440,000 Direct manufacturing labor 495,000 Variable costs (for setups, materials handling, quality control, etc.) that vary with number of batches, 220 batches * $500 per batch 110,000 ⚫ Fixed Costs Fixed manufacturing costs Fixed marketing costs Total costs 300,000 200,000 $1,545,000 Carilla has just received a special one-time-only order for 4,000 pieces at $150 per piece. Accepting the special order would not affect the company's regular business. Carilla makes pieces for its existing customers in batch sizes of 50 pieces (220 batches 50 pieces per batch = 11,000 pieces). The special order requires Carilla to make the pieces in 40 batches of 100 each.
Chapter10: Short-term Decision Making
Section: Chapter Questions
Problem 6PA: Gent Designs requires three units of part A for every unit of Al that it produces. Currently, part A...
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Should Carilla accept this special order? Show your calculations.
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