Question - Mayflower Corp manufactures and sells medals for winners of athletic events. The company normally charges $33 per medal. The average costs for a medal is shown below.
Direct materials: $12
Direct labor: 8
Variable manufacturing overhead: 6
Variable marketing expenses: 2
Fixed manufacturing overhead: 10 ($500,000 fixed manufacturing overhead/50,000 medals)
Total costs: $38
Mayflower Corp has enough idle capacity to accept a one-time only special order for 5,000 medals at $25 per medal. Hampton Company will not incur any variable marketing expenses for this order and no additional fixed costs.
Required - Should Mayflower Corp accept this special order? Please state your decision and provide numerical support for your decision.