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New Member
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Jun 23, 2012, 01:11 PM
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Should Holiday Decorations Unique accept the special order made by the college?
Holiday Decorations Unique has been approached by the community college to make special decorations for the faculty and staff. The college is willing to buy 5,000 Christmas ornaments with their own design for $6 a piece. The company normally sells its decorations for $12.00 each. A break down of their costs is as follows:
Direct Materials: $2.00
Direct Labor: .50
Variable Costs: .50
Fixed Costs: 1.50
Total Cost Per Unit: $4.50
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BossMan
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Jun 23, 2012, 01:13 PM
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And what do YOU think ?
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New Member
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Jun 23, 2012, 01:16 PM
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No
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BossMan
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Jun 23, 2012, 01:16 PM
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Why ?
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New Member
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Jun 23, 2012, 01:48 PM
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Actually, Yes because the manufacturing cost per unit of $4.50 is lower than the special offer sales price per unit of $6.
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Ultra Member
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Jun 23, 2012, 03:39 PM
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What was the question?
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New Member
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Jun 23, 2012, 03:45 PM
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Should Holiday Decorations Unique accept the special order made by the college?
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Ultra Member
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Jun 23, 2012, 07:40 PM
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Well what is your answer?
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New Member
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Jun 23, 2012, 08:15 PM
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You are suppose to help me out, not ask me a question right back
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Expert
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Jun 23, 2012, 08:54 PM
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It's against the TOS of this site to do your homework for you.
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Ultra Member
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Jun 23, 2012, 09:52 PM
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Originally Posted by PhillySportsFan
you are suppose to help me out, not ask me a question right back
I will help hen you explain what your problem is. I will not do your work for you
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New Member
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Jun 24, 2012, 10:59 AM
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All right then explain the problem to me.
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Ultra Member
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Jun 24, 2012, 04:33 PM
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It is a sales transaction, a special volumn order with a 25% margin what is asked is whether the company should forgo it's extortionate margin in this instance and take a smaller profit
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New Member
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Jun 24, 2012, 08:40 PM
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Yes, because variable costs are $3 per unit, and the sale price is $6 per unit for a contribution to cover the fixed costs and G&A Expenses of $3per unit. Thus, $3 will go directly to increase net income
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New Member
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Jun 24, 2012, 08:41 PM
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That's the answer everyone. Thanks for the help, NOT!
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Ultra Member
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Jun 24, 2012, 10:36 PM
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Pleased to see your progress
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