Flower CoManufactures and Sells Medals for Winners of Athletic and Other

question 82

Essay

Flower Co.manufactures and sells medals for winners of athletic and other events.Its manufacturing plant has the capacity to produce 18,000 medals each month;current monthly production is 17,100 medals.The company normally charges $88 per medal.Cost data for the current level of production are shown below:
$\begin{array}{l}\begin{array}{|l|r|}\hline\text { Variable costs: }\\\hline \text { Direct materials } & \$ 495,900 \\\hline \text { Direct labor } & \$ 324,900 \\\hline \text { Selling and administrative } & \$ 30,780 \\\hline \text { Fixed costs: } & \\\hline \text { Manufacturing } & \$ 345,420 \\\hline \text { Selling and administrative } & \$ 164,160 \\\hline\end{array}\end{array}$

The company has just received a special one-time order for 600 medals at $73 each.For this particular order,no variable selling and administrative costs would be incurred.This order would also have no effect on fixed costs.Required:
Should the company accept this special order? Why? (CMA adapted)

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Definitions:

Representativeness Bias

Basing a decision on similarity to other situations.

Facilitator

An individual who makes an action or process easier or assists in the progress of discussions and processes within a group.

Supervisor

An individual who oversees and manages the work of others, typically in a professional or work setting.

Participant

An individual who takes part in an activity or event, often used in the context of research, workshops, or group processes.