Kneller Corporation manufactures and sells medals for winners of athletic and other events. Its manufacturing plant has the capacity to produce 15,000 medals each month; current monthly production is 10,000 medals. The company normally charges $96 per medal. Cost data for the current level of production are shown below:
The company has just received a special one-time order for 500 medals at $83 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?

Question

Kneller Corporation manufactures and sells medals for winners of athletic and other events. Its manufacturing plant has the capacity to produce 15,000 medals each month; current monthly production is 10,000 medals. The company normally charges $96 per medal. Cost data for the current level of production are shown below:
  The company has just received a special one-time order for 500 medals at $83 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?

Quizplus · Accepted Answer

The Answer of Kneller Corporation manufactures and sells medals for winners of athletic and other events. Its manufacturing plant has the capacity to produce 15,000 medals each month; current monthly production is 10,000 medals. The company normally charges $96 per medal. Cost data for the current level of production are shown below:
  The company has just received a special one-time order for 500 medals at $83 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?

Kneller Corporation Manufactures and Sells Medals for Winners of Athletic