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Adamyan Co

question 62

Essay

Adamyan Co. manufactures and sells medals for winners of athletic and other events. Its manufacturing plant has the capacity to produce 15,000 medals each month; current monthly production is 12,750 medals. The company normally charges $120 per medal. Cost data for the current level of production are shown below: Adamyan Co. manufactures and sells medals for winners of athletic and other events. Its manufacturing plant has the capacity to produce 15,000 medals each month; current monthly production is 12,750 medals. The company normally charges $120 per medal. Cost data for the current level of production are shown below:   The company has just received a special one-time order for 700 medals at $83 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? The company has just received a special one-time order for 700 medals at $83 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?


Definitions:

Sustainable Growth

Refers to an achievable growth rate that a company or economy can maintain without running into problems.

Profit Responsibility

The accountability of individuals or departments within an organization to meet specific profit targets or financial performance metrics.

Firm

A business organization, such as a corporation or partnership, engaged in commercial, industrial, or professional activities.

Owners

Individuals or entities that hold legal title to an asset, property, or business.

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