The Following Information Relates to a One-Time Special Order from a Flood

question 18

Essay

The following information relates to a one-time special order from a flood relief organization for 200 of its book bags at $8.50. Current manufacturing costs are as follows.
$\begin{array}{lr}\text { Direct Material per bag } & \$ 3.24 \\\text { Direct Labor } & 4.21 \\\text { Variable Manufacturing Overhead } & .55 \\\text { Variable Selling costs } & .76 \\\text { Fixed Manufacturing Overhead } & 1.25\end{array}$
Fixed manufacturing overhead is based on capacity of 4,500 units per year. Normal sales is 4,000 book bags per year. Only $0.46 of the selling costs will be incurred for this special order. What are the relevant costs regarding this special order? Pose one nonfinancial consideration regarding the acceptance or rejection of this special offer.

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Definitions:

Unemployment

The condition of being jobless among individuals who are actively seeking work. It is a key indicator of economic health, measured by the unemployment rate.

Bureau of Labor Statistics

A unit of the United States Department of Labor that is responsible for collecting and analyzing important economic data, including employment and unemployment statistics.

Unemployed

Individuals who are capable of working and actively seeking employment but are unable to find a job.

Cyclical Unemployment

Unemployment that results from economic downturns or recessions, where there is insufficient demand for labor.