Van Buren Co. 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 14,250 medals. The company normally charges $115 per medal. Cost data for the current level of production are shown below.
|
Variable Costs |
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|
Direct Materials |
$969,000 |
|
|
Direct Labor |
$270,750 |
|
|
Selling and Administrative |
$270,075 |
|
|
Fixed Costs |
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|
Manufacturing |
$370,550 |
|
|
Selling and Administrative |
$89,775 |
The company has just received a special one-time order for 600 medals at $102 each. For this particular order, no variable selling and administrative costs would be incurred. This order would also have no effect on fixed costs.
Required:
Should the company accept this special order? Why?