Question Completion:
Abbie Phillips has a special order for 100 prints at $10.
Answer:
WePRINT COMPANY
Since the company has not reached full capacity, it should accept the order. It will bring in an additional revenue of $1,000 and an additional operating income of $995.
Explanation:
a) Data and Calculations:
Summary of Monthly Operating Costs
Monthly costs at 150,000 volume
Manufacturing costs:
Direct material - variable $ 4,500
Direct labor - variable 1,500
Direct labor - fixed 3,000
Manufacturing overhead - variable 1,500
Manufacturing overhead - fixed 3,375
Total manufacturing costs $15,375
Nonmanufacturing costs:
Sales - variable 1,500
Sales - fixed 1,875
Corporate - fixed 3,750
Total nonmanufacturing costs $ 7,125
Total costs $22 500
Manufacturing costs: 150,000 Per Unit Relevant Cost/Unit
Direct material - variable $ 4,500 $0.03 $0.03
Direct labor - variable 1,500 0.01 0.01
Direct labor - fixed 3,000 0.02
Manufacturing overhead - variable 1,500 0.01 0.01
Manufacturing overhead - fixed 3,375 0.02
Total manufacturing costs $15,375 0.09 0.05
Nonmanufacturing costs:
Sales - variable 1,500 0.01
Sales - fixed 1,875 0.01
Corporate - fixed 3,750 0.03
Total nonmanufacturing costs $ 7,125 0.05
Total costs $22 500 0.14 0.05
