Rippey Corporation manufactures a single product witht he following unit costs for 5,000 units:
- Direct materials: 60
- Direct labor: 30
- Factory overhead (40% variable): 90
- Selling expense (60% variable): 30
- Administrative expenses (20% variable) 15
- Total per unit: 225
Recently, a company approached Rippey Corporation about buying 1,000 units for $225. Currently, the Models are sold to dealers for $412.50. Rippey's capacity is sufficient to produce the extra 1,000 units. Ne additional selling expenses would be incurred on the special order.
Required:
- Should Rippey accept the special order if its goal is to maximize short-run profits?
- How much will income be affected if Rippey accepts the special order?