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 coasts:
- 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