Anglen Co. manufactures and sells trophies for winners of athletic and other events. Its manufacturing plant has the capacity to produce 18,000 trophies each month; current monthly production is 14,400 trophies. The company normally charges $103 per trophy. Cost data for the current level of production are shown below:
$\begin{array}{lr}\text { Variable costs: }\
\text { Direct materials } & \$ 460,800 \
\text { Direct labor } & \$ 316,800 \
\text { Selling and administrative } & \$ 15,840 \
\text { Fixed costs: } & \
\text { Manufacturing } & \$ 404,640 \
\text { Selling and administrative } & \$ 74,880
\end{array}$ The company has just received a special one-time order for 900 trophies at $48 each. For this particular order, no variable selling and administrative costs would be incurred. This order would also have no effect on fixed costs. Assume that direct labor is a variable cost.
Required:
Should the company accept this special order? Why?

Question

Anglen Co. manufactures and sells trophies for winners of athletic and other events. Its manufacturing plant has the capacity to produce 18,000 trophies each month; current monthly production is 14,400 trophies. The company normally charges $103 per trophy. Cost data for the current level of production are shown below:
 $\begin{array}{lr}\text { Variable costs: }\
\text { Direct materials } & \$ 460,800 \
\text { Direct labor } & \$ 316,800 \
\text { Selling and administrative } & \$ 15,840 \
\text { Fixed costs: } & \
\text { Manufacturing } & \$ 404,640 \
\text { Selling and administrative } & \$ 74,880
\end{array}$ The company has just received a special one-time order for 900 trophies at $48 each. For this particular order, no variable selling and administrative costs would be incurred. This order would also have no effect on fixed costs. Assume that direct labor is a variable cost.
Required:
Should the company accept this special order? Why?

Quizplus · Accepted Answer

The Answer of Anglen Co. manufactures and sells trophies for winners of athletic and other events. Its manufacturing plant has the capacity to produce 18,000 trophies each month; current monthly production is 14,400 trophies. The company normally charges $103 per trophy. Cost data for the current level of production are shown below:
 $\begin{array}{lr}\text { Variable costs: }\
\text { Direct materials } & \$ 460,800 \
\text { Direct labor } & \$ 316,800 \
\text { Selling and administrative } & \$ 15,840 \
\text { Fixed costs: } & \
\text { Manufacturing } & \$ 404,640 \
\text { Selling and administrative } & \$ 74,880
\end{array}$ The company has just received a special one-time order for 900 trophies at $48 each. For this particular order, no variable selling and administrative costs would be incurred. This order would also have no effect on fixed costs. Assume that direct labor is a variable cost.
Required:
Should the company accept this special order? Why?

Anglen Co Manufactures and Sells Trophies for Winners of Athletic and and Other