Thursday, September 16, 2010

Should the special order be accepted? Why or why not (what is the dollar effect?

Seville Company manufactures a product with a unit variable cost of $42 and a unit sales price of $75. Fixed manufacturing costs were $180,000 when 10,000 units were produced and sold, equating to $18 per unit. The company has a one-time opportunity to sell an additional 1,000 units at $55 each in an international market which would not affect its present sales. The company has sufficient capacity to produce the additional units but would incur $2 of additional shipping cost per unit.