David's Desks manufactures office desks sold to corporate clients for $300 each. The plant capacity is...
80.2K
Verified Solution
Link Copied!
Question
Accounting
David's Desks manufactures office desks sold to corporate clients for $300 each. The plant capacity is 100,000 units annually, but normal volume is 70,000 units. The unit and total costs at normal volume are:
Type of Cost | Unit Costs | Total Costs |
Direct materials | $90.00 | $6,300,000 |
Direct labor | $60.00 | $4,200,000 |
Manufacturing support | $80.00 | $5,600,000 |
Selling and administrative | $40.00 | $2,800,000 |
Total costs | $270.00 | $18,900,000 |
Fixed manufacturing support costs are $5,000,000, and fixed selling and administrative costs are $2,500,000.
A potential customer offers to buy 20,000 units at $250 each, with minimal packaging reducing variable selling and administrative costs by 50%.
Required: Assess if David's Desks should accept the special order. Prepare a variable cost analysis to support your decision.
Get Answers to Unlimited Questions
Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!
Membership Benefits:
- Unlimited Question Access with detailed Answers
- Zin AI - 3 Million Words
- 10 Dall-E 3 Images
- 20 Plot Generations
- Conversation with Dialogue Memory
- No Ads, Ever!
- Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!
Other questions asked by students
StudyZin's Question Purchase
1 Answer
$0.99
(Save $1 )
One time Pay
- No Ads
- Answer to 1 Question
- Get free Zin AI - 50 Thousand Words per Month
Unlimited
$4.99*
(Save $5 )
Billed Monthly
- No Ads
- Answers to Unlimited Questions
- Get free Zin AI - 3 Million Words per Month
*First month only
Free
$0
- Get this answer for free!
- Sign up now to unlock the answer instantly
You can see the logs in the Dashboard.