Manning 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 15,300 trophies. The company normally charges $141 per trophy. Cost data for the current level of production are shown below.
|
Variable Costs |
|
|
Direct Materials |
$948,600 |
|
Direct Labor |
$290,700 |
|
Selling and Administrative |
$41,300 |
|
Fixed Costs |
|
|
Manufacturing |
$579,870 |
|
Selling and Administrative |
$134,640 |
The company has just received a special one-time order for 900 trophies at $73 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?