Assume that the monthly capacity of a sporting goods business is 25,000 soccer balls. Current sales and production are averaging 20,000 soccer balls per month, and the soccer balls sell for $40 each. The business receives an offer from an exporter for 5,000 footballs at $36 each. Pricing policies in the domestic market will not be affected, and production can be spread over three months. Variable costs per unit consist of $11.00 for direct materials, $9.00 for direct labor, and $5.00 for variable manufacturing overhead. Fixed costs are $15.00 per unit. What is the differential income or loss from accepting the special order?

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The Answer of Assume that the monthly capacity of a sporting goods business is 25,000 soccer balls. Current sales and production are averaging 20,000 soccer balls per month, and the soccer balls sell for $40 each. The business receives an offer from an exporter for 5,000 footballs at $36 each. Pricing policies in the domestic market will not be affected, and production can be spread over three months. Variable costs per unit consist of $11.00 for direct materials, $9.00 for direct labor, and $5.00 for variable manufacturing overhead. Fixed costs are $15.00 per unit. What is the differential income or loss from accepting the special order?

Assume That the Monthly Capacity of a Sporting Goods Business