Biello 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:
- Direct materials 969,000
- Direct labor 270,750
- Selling and administrative 27,075
- Fixed Costs:
- Manufacturing 350,550
- 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?