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Finch Company manufactures a personal computer designed for use in schools and markets it under its own label. Finch has the capacity to produce 38,000 units a year but is currently producing and selling only 13,000 units a year. The computer's normal selling price is $1,770 per unit with no volume discounts. The unit-level costs of the computer's production are $600 for direct materials, $260 for direct labor, and $140 for indirect unit-level manufacturing costs. The total product- and facility-level costs incurred by Finch during the year are expected to be $2,240,000 and $815,000, respectively. Assume that Finch receives a special order to produce and sell 3,140 computers at $1,270 each. Required Calculate the contribution to profit from the special order. Should Finch accept or reject the special order? Contribution to profit Should Finch accept or reject the special order?

Finch Company manufactures a personal computer designed for use in schools and markets it under its own label. Finch has the capacity to produce 38,000 units a year but is currently producing and selling only 13,000 units a year. The computer's normal selling price is $1,770 per unit with no volume discounts. The unit-level costs of the computer's production are $600 for direct materials, $260 for direct labor, and $140 for indirect unit-level manufacturing costs. The total product- and facility-level costs incurred by Finch during the year are expected to be $2,240,000 and $815,000, respectively. Assume that Finch receives a special order to produce and sell 3,140 computers at $1,270 each. Required Calculate the contribution to profit from the special order. Should Finch accept or reject the special order? Contribution to profit Should Finch accept or reject the special order?

Managerial Accounting
Managerial Accounting
15th Edition
ISBN:9781337912020
Author:Carl Warren, Ph.d. Cma William B. Tayler
Publisher:Carl Warren, Ph.d. Cma William B. Tayler
Chapter11: Differential Analysis And Product Pricing
Section: Chapter Questions
Problem 2CMA
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Finch Company manufactures a personal computer designed for use in schools and markets it under its own label. Finch has the capacity to produce 38,000 units a year but is currently producing and selling only 13,000 units a year. The computer's normal selling price is $1,770 per unit with no volume discounts. The unit-level costs of the computer's production are $600 for direct materials, $260 for direct labor, and $140 for indirect unit-level manufacturing costs. The total product- and facility-level costs incurred by Finch during the year are expected to be $2,240,000 and $815,000, respectively. Assume that Finch receives a special order to produce and sell 3,140 computers at $1,270 each. Required Calculate the contribution to profit from the special order. Should Finch accept or reject the special order? Contribution to profit Should Finch accept or reject the special order?
Transcribed Image Text:Finch Company manufactures a personal computer designed for use in schools and markets it under its own label. Finch has the capacity to produce 38,000 units a year but is currently producing and selling only 13,000 units a year. The computer's normal selling price is $1,770 per unit with no volume discounts. The unit-level costs of the computer's production are $600 for direct materials, $260 for direct labor, and $140 for indirect unit-level manufacturing costs. The total product- and facility-level costs incurred by Finch during the year are expected to be $2,240,000 and $815,000, respectively. Assume that Finch receives a special order to produce and sell 3,140 computers at $1,270 each. Required Calculate the contribution to profit from the special order. Should Finch accept or reject the special order? Contribution to profit Should Finch accept or reject the special order?
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