Kneller Co

question 165

Essay

Kneller Co.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?

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Definitions:

Unbalanced

Lacking equilibrium or stability in terms of emotional state, workload, resource distribution, or other areas affecting individuals or groups.

Balance Theory

A psychological theory suggesting that individuals strive for consistency among their beliefs, attitudes, and sentiments in interpersonal relationships.

Heider

Refers to Fritz Heider, an Austrian psychologist known for his contributions to attribution theory and balance theory within social psychology.

Balanced State

A condition of mental or emotional stability where stresses and forces are well managed or in equilibrium.