Kneller Co. manufactures and sells medals for winners of athletic and other events. Its manufacturing plant has the capacity to produce 23,000 medals each month; current monthly production is 10,000 medals. The company normally charges $82 per medal. Cost data for the current level of production are shown below: Variable costs: $ Direct materials 397,500 Direct labor 127,200 Selling and administrative 20,600 Fixed costs: Manufacturing 118,800 Selling and administrative 65,000 The company has just received a special one-time order for 400 medals at $63 each. For this particular order, no variable selling and administrative costs would be incurred. This order would also have no effect on fixed costs. However, for this special one-time order a specific cutter machine to emboss logo will be required which may be rented for $ 1500 for required period. Assume that direct labor is a variable cost. Required: Calculate Cost of single medal produced in this Special Order. Should the company accept this special order? Write only Yes or No Calculate Advantage or Disadvantage of Accepting this Special Order (in case of disadvantage/ loss write in bracket)
Kneller Co. manufactures and sells medals for winners of athletic and other events. Its manufacturing plant has the capacity to produce 23,000 medals each month; current monthly production is 10,000 medals. The company normally charges $82 per medal. Cost data for the current level of production are shown below: Variable costs: $ Direct materials 397,500 Direct labor 127,200 Selling and administrative 20,600 Fixed costs: Manufacturing 118,800 Selling and administrative 65,000 The company has just received a special one-time order for 400 medals at $63 each. For this particular order, no variable selling and administrative costs would be incurred. This order would also have no effect on fixed costs. However, for this special one-time order a specific cutter machine to emboss logo will be required which may be rented for $ 1500 for required period. Assume that direct labor is a variable cost. Required: Calculate Cost of single medal produced in this Special Order. Should the company accept this special order? Write only Yes or No Calculate Advantage or Disadvantage of Accepting this Special Order (in case of disadvantage/ loss write in bracket)
Chapter6: Activity-based, Variable, And Absorption Costing
Section: Chapter Questions
Problem 2PA: Five Card Draw manufactures and sells 24,000 units of Diamonds, which retails for $180, and 27,000...
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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 23,000 medals each month; current monthly production is 10,000 medals. The company normally charges $82 per medal. Cost data for the current level of production are shown below: Variable costs: $ Direct materials 397,500 Direct labor 127,200 Selling and administrative 20,600 Fixed costs: Manufacturing 118,800 Selling and administrative 65,000 The company has just received a special one-time order for 400 medals at $63 each. For this particular order, no variable selling and administrative costs would be incurred. This order would also have no effect on fixed costs. However, for this special one-time order a specific cutter machine to emboss logo will be required which may be rented for $ 1500 for required period. Assume that direct labor is a variable cost. Required: Calculate Cost of single medal produced in this Special Order. Should the company accept this special order? Write only Yes or No Calculate Advantage or Disadvantage of Accepting this Special Order (in case of disadvantage/ loss write in bracket)
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