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Campbell Quilting Company makes blankets that it markets through a variety of department stores. It...

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Accounting

Campbell Quilting Company makes blankets that it markets through a variety of department stores. It makes the blankets in batches of 2,000 units. Campbell made 28,000 blankets during the prior accounting period. The cost of producing the blankets is summarized here.

Materials cost ($26 per unit 28,000) $ 728,000
Labor cost ($23 per unit 28,000) 644,000
Manufacturing supplies ($5 28,000) 140,000
Batch-level costs (28 batches at $7,000 per batch) 196,000
Product-level costs 230,000
Facility-level costs 290,000
Total costs $ 2,228,000
Cost per unit = $2,228,000 28,000 = $79.6

Required

  1. Sunny Motels has offered to buy a batch of 700 blankets for $60 each. Campbells normal selling price is $95 per unit. Calculate the relevant cost per unit for the special order. Based on the preceding quantitative data, should Campbell accept the special order?

  2. Sunny offered to buy a batch of 2,000 blankets for $60 per unit, calculate the relevant cost per unit for the special order. Should Campbell accept the special order?

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