Rebel Base Company mines and manufactures Kyber crystals designed for use in light sabers. The company markets the crystals under its own label. Rebel Base has the capacity to mine and produce 39,000 units a year but is currently mining, producing, and selling only 16,000 units a year. The crystal's normal selling price is $1,640 per unit with no volume discounts. The unit-level costs of the crytsal's mining and production are $470 for direct materials, $150 for direct labor, and $160 for indirect unit-level manufacturing costs. The total product- and facility-level costs incurred by Rebel Base during the year are expected to be $2,120,000 and $805,000, respectively. Assume that Rebel Base receives a special order to mine, produce, and sell 3,020 crystals at $1,210 each.

Rebel Base Company mines and manufactures Kyber crystals designed for use in light sabers. The company markets the crystals under its own label. Rebel Base has the capacity to mine and produce 39,000 units a year but is currently mining, producing, and selling only 16,000 units a year. The crystal's normal selling price is $1,640 per unit with no volume discounts. The unit-level costs of the crytsal's mining and production are $470 for direct materials, $150 for direct labor, and $160 for indirect unit-level manufacturing costs. The total product- and facility-level costs incurred by Rebel Base during the year are expected to be $2,120,000 and $805,000, respectively. Assume that Rebel Base receives a special order to mine, produce, and sell 3,020 crystals at $1,210 each.

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter10: Short-term Decision Making

Section: Chapter Questions

Problem 4EB: Dimitri Designs has capacity to produce 30,000 desk chairs per year and is currently selling all...

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Dimitri Designs has capacity to produce 30,000 desk chairs per year and is currently selling all 30,000 for $240 each. Country Enterprises has approached Dimitri to buy 800 chairs for $210 each. Dimitris normal variable cost is $165 per chair, including $50 per unit in direct labor per chair. Dimitri can produce the special order on an overtime shift, which means that direct labor would be paid overtime at 150% of the normal pay rate. The annual fixed costs will be unaffected by the special order and the contract will not disrupt any of Dimitris other operations. What will be the impact on profits of accepting the order?
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