Albertine Co

question 90

Essay

Albertine Co.manufactures and sells trophies for winners of athletic and other events.Its manufacturing plant has the capacity to produce 16,000 trophies each month;current monthly production is 12,800 trophies.The company normally charges $113 per trophy.Cost data for the current level of production are shown below:
The company has just received a special one-time order for 1,200 trophies at $61 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?

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Definitions:

Cash Sales

Transactions in which goods or services are exchanged for cash payment at the time of the sale.

Electronic Funds Transfers

The digital transfer of money from one bank account to another either within the same financial institution or across different banks, via computer-based systems.

Principal Advantages

Key benefits or main positives associated with a method, strategy, or system.

Debit Memos

Debit memos are documents issued by a seller to a buyer to adjust upward the amount a buyer owes, often due to an undercharge, returned goods, or other corrections to an invoice.