A Company Is Currently Operating at 70% Capacity Producing 8,000

question 36

Essay

A company is currently operating at 70% capacity producing 8,000 units. Cost information relating to this current production is shown in the following table:

$$\begin{array} { | l | r | } \hline & \text { Per Unit } \\\hline \text { Sales price } & \$ 15.00 \\\hline \text { Direct material } & \$ 3.20 \\\hline \text { Direct labor } & \$ 7.10 \\\hline \text { Variable overhead } & \$ 0.05 \\\hline \text { Fixed overhead } & \$ 0.60 \\\hline\end{array}$$ The company has been approached by a customer with a request for a special order for 1,500 units. The sales price per unit for this special order is $10. Should the company accept the special order?

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Definitions:

BPA Chemical Compounds

Bisphenol A (BPA) is an industrial chemical compound used in manufacturing plastics and epoxy resins, often found in containers that store food and beverages.

Infants

Young babies, typically considered to be in the age range from birth to one year, in the early stages of development.

Lactating Mothers

Women who are producing milk in their mammary glands, typically following childbirth, for the purpose of feeding their infants.

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A type of legume that is rich in nutrients and can be found in various cuisines worldwide; also known as broad beans.