Dapper Dan produces a man's suit that sells for $200.Although the company's production capacity is 3,000 suits per year,only 2,500 suits are currently being produced and sold.At this level of production,the company incurs the following costs:
$$\begin{array} { l r r }
\text { Unit-level material cost per suit } & \$ 80 \
\text { Unit-level labor cost per suit } & \$ 40 \
\text { Unit-level overhead per suit } & \$ 20 \
\text { Batch-level set-up costs for each batch of 500 suits } & \$ 1,200 \
\text { Annual product-level costs } & \$ 15,000 \
\text { Allocated facility-level costs } & \$ 50,000
\end{array}$$ Easton Clothiers has offered to purchase 500 suits as a one-time special purchase at a price of $135.
Required:
Prepare a quantitative analysis that indicates whether the special order should be accepted.

Question

Dapper Dan produces a man's suit that sells for $200.Although the company's production capacity is 3,000 suits per year,only 2,500 suits are currently being produced and sold.At this level of production,the company incurs the following costs:
 $$\begin{array} { l r r } 
\text { Unit-level material cost per suit } & \$  80 \
\text { Unit-level labor cost per suit } & \$ 40 \
\text { Unit-level overhead per suit } & \$  20 \
\text { Batch-level set-up costs for each batch of 500 suits } & \$ 1,200 \
\text { Annual product-level costs } & \$ 15,000 \
\text { Allocated facility-level costs } & \$ 50,000
\end{array}$$ Easton Clothiers has offered to purchase 500 suits as a one-time special purchase at a price of $135.
Required:
Prepare a quantitative analysis that indicates whether the special order should be accepted.

Quizplus · Accepted Answer

The Answer of Dapper Dan produces a man's suit that sells for $200.Although the company's production capacity is 3,000 suits per year,only 2,500 suits are currently being produced and sold.At this level of production,the company incurs the following costs:
 $$\begin{array} { l r r } 
\text { Unit-level material cost per suit } & \$  80 \
\text { Unit-level labor cost per suit } & \$ 40 \
\text { Unit-level overhead per suit } & \$  20 \
\text { Batch-level set-up costs for each batch of 500 suits } & \$ 1,200 \
\text { Annual product-level costs } & \$ 15,000 \
\text { Allocated facility-level costs } & \$ 50,000
\end{array}$$ Easton Clothiers has offered to purchase 500 suits as a one-time special purchase at a price of $135.
Required:
Prepare a quantitative analysis that indicates whether the special order should be accepted.

Dapper Dan Produces a Man's Suit That Sells for $200