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Walton Company manufactures a personal computer designed for use in schools and markets it under its own label. Walton has the capacity to produce 27,000 units a year but is currently producing and selling only 14,000 units a year. The computer's normal selling price is $1,620 per unit with no volume discounts. The unit-level costs of the computer's production are $540 for direct materials, $290 for direct labor, and $170 for indirect unit-level manufacturing costs. The total product- and facility-level costs incurred by Walton during the year are expected to be $2,240,000 and $802,000, respectively. Assume that Walton receives a special order to produce and sell 3,000 computers at $1,290 each. Required Calculate the contribution to profit from the special order. Should Walton accept or reject the special order? Contribution to profit Should Walton accept or reject the special order?

Walton Company manufactures a personal computer designed for use in schools and markets it under its own label. Walton has the capacity to produce 27,000 units a year but is currently producing and selling only 14,000 units a year. The computer's normal selling price is $1,620 per unit with no volume discounts. The unit-level costs of the computer's production are $540 for direct materials, $290 for direct labor, and $170 for indirect unit-level manufacturing costs. The total product- and facility-level costs incurred by Walton during the year are expected to be $2,240,000 and $802,000, respectively. Assume that Walton receives a special order to produce and sell 3,000 computers at $1,290 each. Required Calculate the contribution to profit from the special order. Should Walton accept or reject the special order? Contribution to profit Should Walton 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
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Walton Company manufactures a personal computer designed for use in schools and markets it under its own label. Walton has the capacity to produce 27,000 units a year but is currently producing and selling only 14,000 units a year. The computer's normal selling price is $1,620 per unit with no volume discounts. The unit-level costs of the computer's production are $540 for direct materials, $290 for direct labor, and $170 for indirect unit-level manufacturing costs. The total product- and facility-level costs incurred by Walton during the year are expected to be $2,240,000 and $802,000, respectively. Assume that Walton receives a special order to produce and sell 3,000 computers at $1,290 each. Required Calculate the contribution to profit from the special order. Should Walton accept or reject the special order? Contribution to profit Should Walton accept or reject the special order?
Transcribed Image Text:Walton Company manufactures a personal computer designed for use in schools and markets it under its own label. Walton has the capacity to produce 27,000 units a year but is currently producing and selling only 14,000 units a year. The computer's normal selling price is $1,620 per unit with no volume discounts. The unit-level costs of the computer's production are $540 for direct materials, $290 for direct labor, and $170 for indirect unit-level manufacturing costs. The total product- and facility-level costs incurred by Walton during the year are expected to be $2,240,000 and $802,000, respectively. Assume that Walton receives a special order to produce and sell 3,000 computers at $1,290 each. Required Calculate the contribution to profit from the special order. Should Walton accept or reject the special order? Contribution to profit Should Walton accept or reject the special order?
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