Kneller Company manufactures and sells medals for winners of athletic and other events. Its manufacturing plant has the capacity to produce 12,000 medals each month; current monthly production is 9,600 medals. The company normally charges $99 per medal. Cost data for the current level of production are shown below:
The company has just received a special one-time order for 500 medals at $89 each. For this particular order, no variable selling and administrative costs would be incurred. This order would also have no effect on fixed costs. Assume that direct labor is a variable cost.Required:Should the company accept this special order? Why?
Definitions:
Discharge Pattern
The variation in the volume of water that flows in a stream or river over time.
Hydrograph
A chart that illustrates the change in discharge rate over time at a particular location in a river, or any other flow-carrying channel or conduit.
Increases
The act or process of becoming larger or greater in size, amount, number, or degree.
Susceptible to Erosion
A condition describing materials or landscapes that are easily worn away or removed by the action of water, wind, ice, or human activities.
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