The manufacturing plant of Carilla Ltd. specializes in crafting specialized pieces for carnival. 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 300,000 Fixed marketing costs 200,000 Total costs $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. Suppose plant capacity were only 13,000 pieces instead of 15,000 pieces each month. The special order must either be taken in full or be rejected completely. Should Carilla accept the special order? Show your calculations

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter2: Building Blocks Of Managerial Accounting

Section: Chapter Questions

Problem 5EA: Rose Company has a relevant range of production between 10,000 and 25.000 units. The following cost...

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The manufacturing plant of Carilla Ltd. specializes in crafting specialized pieces for carnival. 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 300,000 Fixed marketing costs 200,000 Total costs $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. Suppose plant capacity were only 13,000 pieces instead of 15,000 pieces each month. The special order must either be taken in full or be rejected completely. Should Carilla accept the special order? Show your calculations

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