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P11-34 (similar to) Question Help * Hitter Corporation produces baseball bats for kids that it sells for $40 each. At capacity, the company can produce 54,000 bats a year. The costs of producing and selling 54,000 bats are as follows (Click to view the costs.) Read the nequirements. Requirement 1. Suppose Hitter is currently producing and selling 22,000 bats. At this level of production and sales, its fixed costs are the same as given in the preceding table. Gehrig Corporation wants to place a one-time special order for 32,000 bats at $30 each. Hitter will incur no variable selling costs for this special order. Should Hitter accept this one-time special order? Show your calculations Determine the effect on operating income if the order is accepted. (Enter decreases in operating income with parentheses or a minus sign.) Revenues from special order Variable manufacturing costs Increase (decrease) in operating income if order is accepted $ 960,000 $ 256,000 Hitter should accept Gehrig's special order because it increases operating income by S Data Table Requirements 1. Suppose Hitter is currently producing and selling 22,000 bats. At this level of Cost per B Total Costs production and sales, its fixed costs are the same as given in the preceding table. Gehrig Corporation wants to place a one-time special order for 32,000 bats at 530 each. Hitter will incur no variable selling costs for this special order Should Hitter accept this one-time special order? Show your calculations Direct materials Direct manufacturing labor Variable manufacturing overhead Fixed manufacturing overhead Variable selling expenses Fixed selling expenses Total costs 864,000 270,000 54,000 216,000 216,000 216,000 1,836,000 16 S 2. Now suppose Hitter is currently producing and selling 54,000 bats. If Hitter accepts Gehrig's offer it will have to sell 32,000 fewer bats to its regular customers. (a) On financial considerations alone, should Hitter accept this one-time special order? Show your calculations. (b) On financial considerations alone, at what price would Hitter be indifferent between accepting the special order and continuing to sell to its regular customers at $40 per bat? (c) What other factors should Hitter consider in deciding whether to accept the one-time special order? 34 S PrintDone Print Done

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